Syndicated Lending
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Table of contents
- Cover
- Contentsv
- Forewordix
- 1 Introduction to syndicated loans1
- What is a syndicated loan?1
- The growth of the syndicated loan market2
- The secondary market in syndicated loans6
- 2 Attractions of the syndicated loan market7
- The borrower7
- Ability to arrange cross border transactions7
- Alternate borrowers/Special Purpose Vehicles7
- Structure and purpose of loan8
- Restriction of negotiation8
- Uniform terms and conditions9
- Speed of finalization9
- Effect on margins and fees10
- Bilateral relationships with participants11
- Market presence12
- The participants12
- Simplicity and speed12
- Reduced need for direct marketing13
- Quality and spread of assets13
- Market presence14
- Regulatory pressures and capital adequacy14
- Tax efficiency15
- Fee income15
- The arranger and the agent19
- Fee income21
- Market presence21
- Tombstones22
- Syndications timetable – from mandate to drawdown25
- Exercise 126
- Answers to Exercise 127
- 3 Responsibilities and obligations of syndicated loan participants29
- The borrower29
- The information memorandum29
- Representations and covenants29
- Events of default30
- How the borrower chooses an arranger for the syndicated loan31
- Placing power31
- Structuring ability31
- Sector32
- Experience32
- Speed of action32
- Geographic location32
- Margins and fees32
- Underwriting32
- The participants and their responsibilities33
- Commitment33
- Event of default34
- Majority banks34
- Payment sharing35
- Cross default35
- Secondary market sales36
- Other considerations affecting participants in a syndicated loan36
- Reference banks and interest margins36
- Payment risk36
- The agent's role in a default situation37
- Roles of the arranger and the agent37
- Sharing information37
- Conditions Precedent38
- Documentation38
- Other appointments39
- Exercise 240
- Answers to Exercise 241
- 4 The major players in the syndicated loans market43
- League tables43
- Mandated arranger rankings for global syndicated loans45
- Mandated arranger rankings for US syndicated loans46
- Mandated arranger rankings for EMEA syndicated loans47
- Mandated arranger rankings for Asia-Pacific syndicated loans48
- Top 20 providers for global syndicated loans in 200349
- Top 20 providers for US syndicated loans in 200351
- Top 20 providers for EMEA syndicated loans in 200352
- Top 20 providers for Asia-Pacific syndicated loans in 200353
- Top 20 global borrowers of syndicated loans in 200354
- Top 20 US borrowers of syndicated loans in 200355
- Top 20 EMEA borrowers of syndicated loans in 200356
- Top 20 Asia-Pacific borrowers of syndicated loans in 200357
- Industry volume table for global syndicated loans in 200358
- Industry volume table for US syndicated loans in 200360
- Industry volume table for EMEA syndicated loans in 200361
- Industry volume table for Asia-Pacific syndicated loans in 200362
- Barclays Capital63
- 5 Structures used in syndicated loans66
- Overview of syndications66
- Underwritten transactions66
- Arranged or best efforts transactions67
- Club deals67
- Term of loan67
- Revolving facilities68
- Committed and uncommitted facilities68
- Single currency or multi-currency69
- Repayment profiles69
- Repayments via bond issues/acquisition finance70
- Evergreen facilities72
- Senior debt, mezzanine finance, and subordinated loans73
- A subordinated loan73
- Securitization74
- Trade finance/pre-export finance75
- Stock loans76
- Project finance77
- Aircraft finance82
- Ship construction finance83
- Non-recourse loans83
- Standby credits83
- Property finance84
- Vodafone AirTouch85
- 6 The Loan agreement89
- The preamble90
- Definitions91
- The facility96
- The facility96
- Lenders' rights and obligations96
- Purpose96
- Conditions precedent97
- Utilization98
- Repayment98
- Prepayment100
- Interest rate101
- Fees103
- Commitment fee103
- Arrangement fee103
- Front end fee104
- Agency fee104
- Taxes and other deductions105
- Withholding and other taxes indemnity105
- Increased costs105
- Other indemnities105
- Guarantee106
- Guarantee and indemnity106
- Continuing guarantee107
- Waiver of defences107
- Immediate recourse107
- Appropriations107
- No security107
- Additional security108
- Representations and warranties108
- Status108
- Power and authority108
- Execution and delivery108
- Pari passu108
- No proceedings109
- No default109
- No encumbrance109
- Financial information109
- No misleading information109
- Repetition109
- Undertakings110
- Financial statements110
- Other information110
- Change of business and disposals110
- Notification of default111
- Financial covenants111
- Compliance certificate112
- Negative pledge113
- Events of default113
- Indemnities114
- Currency115
- The agent and lenders115
- Sharing payments116
- Transfers of participations116
- Conditions of transfer117
- Transfer fee117
- Responsibility of lenders117
- Procedure for transfer117
- Changes to the obligors119
- Waivers, amendments, and consents120
- Partial invalidity120
- Governing law and jurisdiction121
- Legal opinions121
- 7 Loan covenants125
- The function of loan covenants125
- The games borrowers play126
- Financing decisions126
- Dividend decisions126
- Investment decisions126
- Under investment126
- Increasing business risk127
- Functions of loan covenants127
- Drawbacks to loan covenants128
- Guidelines for efficient covenanting129
- Types of covenants129
- Non-financial covenants130
- Financial covenants130
- Events of default130
- Objectives of individual covenants131
- Negotiating the covenants in the loan agreement132
- Covenants are not legal technicalities132
- Structured negotiations: understanding the lender's viewpoint132
- Economic rationale of the covenants 'package'133
- Number of covenants134
- The restrictions of covenants135
- Tailoring accounting definitions135
- Functioning of covenants during the loan137
- Monitoring compliance with covenants137
- The restriction of management action by covenants138
- Accounting policies and adherence to financial covenants139
- Breach of covenant140
- Where breaches mostly occur140
- The options open to the lending banker141
- The cost to the borrower of breaching covenants142
- The renegotiation process143
- Other issues143
- Disclosure of information about covenants144
- Financial covenants and new accounting standards145
- 8 Secondary loan markets146
- History and development of the secondary loan market146
- LSTA149
- LSTA activities150
- LSTA committees151
- LMA153
- LMA objectives153
- LMA committees154
- Syndicated loans and credit rating agencies156
- 'Efficient' vs. 'inefficient' markets157
- Other market drivers164
- Impact of credit ratings on syndicated loans markets164
- Recent developments in the European syndicated loan market166
- Glossary168
- A168
- B170
- C172
- D174
- E175
- F176
- G176
- I177
- L177
- M178
- N179
- P179
- R179
- S180
- T182
- U182
- W182
- Index183
- A183
- B183
- C184
- D184
- E184
- F184
- J185
- L185
- M186
- N186
- P186
- R186
- S186
- T188
- U188
- V188
- W188
Syndicated Lending aims to increase the readers awareness of the benefits and risks involved in taking part in the Syndicated Loan market.
This book covers:
*Who the major players in the syndication loan market are
*Why syndication loans are used
*Syndication loan structures and documentation
*Secondary syndication loan market
*Inspired from the basic entry level training courses that have been developed by major international banks worldwide.
*Will enable MSc Finance students, MBA students and those already in the finance profession to gain an understanding of the basic information and principles underlying the topic under discussion
*Questions with answers, study topics, practical "real world" examples and text with an extensive bibliography and references ensure learning outcomes can be immediately applied
This book covers:
*Who the major players in the syndication loan market are
*Why syndication loans are used
*Syndication loan structures and documentation
*Secondary syndication loan market
*Inspired from the basic entry level training courses that have been developed by major international banks worldwide.
*Will enable MSc Finance students, MBA students and those already in the finance profession to gain an understanding of the basic information and principles underlying the topic under discussion
*Questions with answers, study topics, practical "real world" examples and text with an extensive bibliography and references ensure learning outcomes can be immediately applied