Arranger finance4/12/2023 ![]() ![]() Once the pricing was set, it was set, except in the most extreme cases. Until 1998, this would have been all there is to it. ![]() The “retail” market for a syndicated loan consists of banks and, in the case of leveraged transactions, finance companies and institutional investors such as mutual funds, structured finance vehicles and hedge funds.īefore formally offering a loan to these retail accounts, arrangers will often read the market by informally polling select investors to gauge appetite for the credit.īased on these discussions, the arranger will launch the credit at a spread and fee it believes will “clear” the market. Once the loan issuer (borrower) picks an arranging bank or banks and settles on a structure of the deal, the syndications process moves to the next phase. ![]() ![]() Seasoned leveraged issuers, in contrast, pay lower fees for re-financings and add-on transactions.īecause investment-grade loans are infrequently drawn down and, therefore, offer drastically lower yields, the ancillary business that banks hope to see is as important as the credit product in arranging such deals, especially because many acquisition-related financings for investment-grade companies are large, in relation to the pool of potential investors, which would consist solely of banks. Merger and acquisition (M&A) and recapitalization loans will likely carry high fees, as will bankruptcy exit financings and restructuring deals for struggling entities.
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