Syndicated Loan
Syndicated loan is a form of loan business in which two or more lenders jointly provide loans for one or more borrowers on the same loan terms and with different duties and sign the same loan agreement. Usually, one bank is appointed as the agent bank to manage the loan business on behalf of the syndicate members.
FEATURES
•Large amount and long term. It can meet borrowers’ demand for funds of long term and large amount.
•Accommodative financing process. It is usually the responsibility of the arranger for doing the preparation work of establishing the syndicate after the borrower and the arranger have agreed on loan terms by negotiation. During implementation of the loans, the borrower does not need to face all members of the syndicate, and relevant withdrawal, repayment of principal with interest and other management work related to the loans shall be fulfilled by the agent bank.
•Diversified approaches to syndicated loans. The same loan syndications can include many forms of loans, such as fixed-term loans, revolving loans, standby L/C line on requirements of the borrower. Meanwhile, the borrower can also choose AUD, RMB, USD, EUR, GBP and other currency or currency portfolio, if needed.
•Interest rates and other terms & conditions are determined by prevailing market conditions. Each lender determines their participation based on their individual assessment on the borrower’s business operation and credit profile as well as market conditions, which facilitate a more competitive financing negotiation, and help the borrower obtain fair interest rates and other terms and conditions.
•Reduction borrowers’ exposure to single lender’s credit risk. Multi banks’ participations enable borrowers to reduce reliance on single lender’s funding commitment via diversification.
