Shopping on line can be easy, simple and save you lots of money. It can also take a lot of your time, frustrate you, and result in unwanted purchases. Now the same can be said for regular high street shopping, but with the vast opportunity presented by the Internet it will pay you to spend a few minutes reading this and understanding how to better optimize your Syndicated Loan shopping experience:
1. Compare - without doubt the biggest advantage that the Syndicated Loan offers shoppers today is the ability to compare thousands of Syndicated Loan at a time. This is a great thing, but not necessarily all the time! Too much can be daunting at times so take advantage of the great comparison sites and where possible let them do the hard work for you.
2. Research - if it has been said it will be on the internet. Ignorance is no longer a justifiable reason for buying the wrong thing. Take the time to research in detail everything that you could possible want to know about
3. Testimonials - don't know anybody that has bought a Syndicated Loan? Wrong! If the Syndicated Loan is good the internet will let you know. Use the Internet as a friend and get testimonials before you buy.
4. Questions - Got a question about Syndicated Loan then search the Forums, FAQ's, Blogs etc. Don't be afraid to ask .....
5. Reputation - Never heard of the company selling Syndicated Loan? Don't worry, no reason why you should know every company in the world, but you know someone that does! Use the internet to find out what people are saying about Syndicated Loan and build up a picture of their reputation for sales, returns, customer service, delivery etc.
6. Returns - still worried that even after all of the above your Syndicated Loan wont be what you want? Check out the returns policy. There is so much competition now that someone, somewhere is bound to offer the terms that you are comfortable with.
7. Feedback - happy with your Syndicated Loan then let people know, after all you are depending on others people input in your buying decision, so why not give a little back.
8. Security - check for the yellow padlock on the Syndicated Loan site before you buy, and the s after http:/ /i.e. https:// = a secure site
9. Contact - got a question about Syndicated Loan, or want to leave a comment then check out the sites contact page. Reputable companies have them and respond.
10. Payment - ready to pay for your Syndicated Loan, then use your credit card or PayPal! Be aware of companies that don't accept them, there may be genuine reasons but given the huge amount of choice you have when buying online there is no reason at all not to buy via credit card or PayPal.
A
syndicated loan (or "syndicated bank facility") is a large loan in which a group of banks work together to provide funds for a borrower. There is usually one lead bank (the "Arranger" or "Agent") that takes a percentage of the loan and syndicates the rest to other banks. A
syndicated loan is the opposite of a
bilateral loan, which only involves one
borrower and one
lender (often a
bank or
financial institution.) A syndicated loan is a much larger and more complicated version of a participation loan. There are typically more than 2 banks involved in a syndication.
Reasons for syndicated lending
Like insurance, a loan is an assumption of risk. For a certain class of loan, with certain rules, the bank might believe that it is likely that 5% of all borrowers may go bankrupt. If the bank's cost of funds is a hypothetical 5%, the bank needs to charge more than 10% interest on the loan to make a profit. In general, banks and the financial markets use risk-based pricing, charging an interest rate depending on the risk of the loan product in general or the risk of the specific borrower. The problem with larger businesses loans, however, is that there are fewer of them. So, if the bank has the only large business loan and if that business happens to be one of the 5% that defaults, then the bank loses all its money. For this reason, it is in the best interest of all banks to split, or "syndicate" their large loans with each other, so each get a
representative sample in their loan portfolios.
A second, often criticized reason for syndicating loans is that it avoids large or surprising
losses and instead usually provides small and more predictable losses. Smaller and more predictable losses are favored by many management teams because of the general perception that companies with "smoother" or more steady earnings are awarded a higher stock price relative to their earnings (benefiting management who is often paid primarily by stock). Critics, such as
Warren Buffett, however, say that many times this practice is
irrational. If the bank could still get a representative sample by not syndicating, and if syndication would reduce their profit margins, then over the long term a bank should make more money by not syndicating. This same dynamic plays out in the
investment banking and insurance fields, where syndication also takes place.
To avoid the
borrower having to deal with all the
syndicate banks individually, one of the syndicate
banks usually acts as an
Agent (law) for all syndicate members and acts as the focal point between them and the borrower.
Largest Syndicated lenders in the United States in 2006
{||
Name ||
Market share|-|JP Morgan ] || 21.4%|-|Citigroup ] || 5.6%|-|Wells Fargo ] || 3.4%|-|Royal Bank of Scotland Group ] || 2.0%|-|Merrill Lynch ] || 1.8%|-|
Credit Suisse || 1.8%|}
EMEA Bookrunner ranking full year 2006
{| class="wikitable"|-! Rank! Name! Volume ($m)! Deals! % Market share|-| 1| RBS| 73,181.59| 112| 6.99|-| 2| Citi| 70,824.57| 95| 6.76|-| 3| BNP Paribas| 66,591.44| 165| 6.36|-| 4| Deutsche Bank| 45,594.37| 42| 4.35|-| 5| Deutsche Bank| 45,594.37| 42| 4.35|-| 6| Calyon| 44,716.73| 88| 4.27|-| 7| JP Morgan| 38,399.01| 39| 3.67|-| 8| SG Corporate & Investment Banking| 37,564.89| 73| 3.59|-| 9| Dresdner Kleinwort| 26,173.32| 47| 2.50|-| 10| HSBC| 21,855.72| 47| 2.09|-|| Subtotal| 472,090.49| 574| 45.06|-|| Total| 1,047,639.18| 1,425| 100.00
|}
External links
- Syndicated Loan riskglossary.com
- Syndicated Loan investopedia.com
- Syndicated Bank Loans: 2006 Default Review and 2007 Outlook
A
syndicated loan (or "syndicated bank facility") is a large
loan in which a group of banks work together to provide funds for a borrower. There is usually one lead bank (the "Arranger" or "Agent") that takes a percentage of the loan and syndicates the rest to other banks. A
syndicated loan is the opposite of a
bilateral loan, which only involves one borrower and one lender (often a bank or
financial institution.) A syndicated loan is a much larger and more complicated version of a participation loan. There are typically more than 2 banks involved in a syndication.
Reasons for syndicated lending
Like insurance, a loan is an assumption of
risk. For a certain class of loan, with certain rules, the bank might believe that it is likely that 5% of all borrowers may go bankrupt. If the bank's cost of funds is a hypothetical 5%, the bank needs to charge more than 10% interest on the loan to make a profit. In general, banks and the financial markets use
risk-based pricing, charging an
interest rate depending on the risk of the loan product in general or the risk of the specific borrower. The problem with larger businesses loans, however, is that there are fewer of them. So, if the bank has the only large business loan and if that business happens to be one of the 5% that defaults, then the bank loses all its money. For this reason, it is in the best interest of all banks to split, or "syndicate" their large loans with each other, so each get a
representative sample in their loan portfolios.
A second, often criticized reason for syndicating loans is that it avoids large or surprising losses and instead usually provides small and more predictable losses. Smaller and more predictable losses are favored by many management teams because of the general perception that companies with "smoother" or more steady earnings are awarded a higher stock price relative to their earnings (benefiting management who is often paid primarily by stock). Critics, such as Warren Buffett, however, say that many times this practice is
irrational. If the bank could still get a representative sample by not syndicating, and if syndication would reduce their profit margins, then over the long term a bank should make more money by not syndicating. This same dynamic plays out in the
investment banking and
insurance fields, where syndication also takes place.
To avoid the
borrower having to deal with all the syndicate banks individually, one of the syndicate
banks usually acts as an
Agent (law) for all syndicate members and acts as the focal point between them and the borrower.
Largest Syndicated lenders in the United States in 2006
{||
Name ||
Market share|-|JP Morgan ] || 21.4%|-|
Citigroup ] || 5.6%|-|Wells Fargo ] || 3.4%|-|Royal Bank of Scotland Group ] || 2.0%|-|Merrill Lynch ] || 1.8%|-|Credit Suisse || 1.8%|}
EMEA Bookrunner ranking full year 2006
{| class="wikitable"|-! Rank! Name! Volume ($m)! Deals! % Market share|-| 1| RBS| 73,181.59| 112| 6.99|-| 2| Citi| 70,824.57| 95| 6.76|-| 3| BNP Paribas| 66,591.44| 165| 6.36|-| 4| Deutsche Bank| 45,594.37| 42| 4.35|-| 5| Deutsche Bank| 45,594.37| 42| 4.35|-| 6| Calyon| 44,716.73| 88| 4.27|-| 7| JP Morgan| 38,399.01| 39| 3.67|-| 8| SG Corporate & Investment Banking| 37,564.89| 73| 3.59|-| 9| Dresdner Kleinwort| 26,173.32| 47| 2.50|-| 10| HSBC| 21,855.72| 47| 2.09|-|| Subtotal| 472,090.49| 574| 45.06|-|| Total| 1,047,639.18| 1,425| 100.00
|}
External links
- Syndicated Loan riskglossary.com
- Syndicated Loan investopedia.com
- Syndicated Bank Loans: 2006 Default Review and 2007 Outlook
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