Syndicated Loans​

A syndicated loan is provided by a group of lenders (referred to as a syndicate) that collaborate to give cash to a single borrower. Each lender is required to offer a specific percentage of the loan and to collect a similar amount of repayments in addition to interest payments. 

Typically, a lead bank or underwriter of the loan, known as the ‘arranger,’ is in charge of structuring the loan arrangement. This lender may contribute a larger amount of the loan or execute activities such as distributing cash flows among syndicate members and doing administrative responsibilities. A syndicated loan deal often includes the following parties:

• Arranger/Lead Bank – responsible for structuring the loan
• Underwriting Bank (optional) – guarantees that the entire loan amount would be made available to the Borrower
• Participating Banks/Lenders – lend a fraction of the total amount required
• Facility Agent – responsible for the administration of the loan e.g. disbursements, repayments etc
• Borrower – seeks the loan and is responsible for the repayment of principal and interests
• Security Trustee responsible for holding the security for the loan on behalf of the lenders