A loan from a number of different lenders acting together.
The lenders form a syndicate and the borrower borrows from the syndicate.
Historically the lenders were normally banks, acting through an 'agent bank'.
The syndicated loan market also now includes some 'non-bank' lenders, notably hedge funds or pension funds, which will also be lending parties in syndicated loans – in the primary market for sub-investment grade and, in the secondary market more widely too.
Non-bank lenders are particularly attracted to fully drawn, often fixed rate tranches of a loan rather than revolving or stand-by tranches.
Three types of syndicated loan deal are:
Loans which are not syndicated are known as bilateral loans.
- Agent bank
- An introduction to loan finance
- Arrangement fee
- Best-efforts deal
- Club deal
- Foreign bond
- Lead bank
- Loan Market Association
- Underwritten deal