Syndicated loan

A syndicated loan is a loan that several lenders grant to a company under a single agreement. One or more arrangers structure the transaction and allocate the commitments among the members of the syndicate. An agent manages drawdowns, payments and information flows during the life of the loan. In its guidance of May 2017 on leveraged transactions, the European Central Bank distinguishes underwritten syndication from best efforts syndication, in which the arranger is not liable for the portion it fails to place. It describes the club deal as a transaction offered to a small group of lenders who agree on each one’s share before signing. The site’s Syndicated loan and club deal page presents these two formats.

A mid-cap company raises €250m. The arranger underwrites the amount, keeps €50m and places €200m with six other lenders. The company signs a single agreement and pays its interest to the agent, which distributes it among the seven lenders pro rata to their commitments.

• The choice between underwriting, best efforts syndication and a club deal
• The flex clauses that allow the arranger to change the margin during syndication
• The majority rules for waivers and amendments
• The lenders’ right to transfer their share and the list of permitted transferees