THE LAW OF MULTI-BANK FINANCING
Syndicated Loans and the Secondary Loan Market
THE LAW OF MULTI-BANK FINANCING
Syndicated Loans and the Secondary Loan Market
Agasha MugashaLLB (Hons), DipLP, LLM PhD
Professor of Law, University of Essex
1
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vPREFACE
This book uses the designation multi-bank fi nancing to encompass different transactions where a group of banks acts in concert to provide credit to one bor-rower. It focuses on syndicated loans and the secondary loan practices of loan trading, credit derivatives, and collateralized debt obligations as practised in the London international fi nancial market and governed by English law. Over the years, many of the non-bank fi nancial institutions have joined this activity and this book notes that development.
The book is written to appeal to different legal audiences. The only assumption made by the author is that the reader is interested in the law as well as its context. There is also moderate coverage of some signifi cant law or practices encountered in other major jurisdictions. Chapter 6 is exclusively on US case law on loan par-ticipation and is included for useful analogies. The chapter sheds light on the US courts approach to bank documents and the reasons behind some of the contrac-tual provisions commonly encountered in such documents. While there is gener-ally more case law in the United States, however, reference to it is minimized in this book due to the different social and economic underpinnings.
Syndicated lending is quick, effi cient, and versatile. It results in the geographical and institutional sharing of credit and risk, thus delivering an internationally inte-grated fi nancial market. Innovations and expansion continue in syndicated loans, contributing to further development of the relevant law. The involvement of non-bank fi nancial institutions in this market has led to different methodologies in the lending markets as well as litigation. Most notably, there is increasing convergence of capital, loan, and equity markets in a trend that is set to continue. Loan markets routinely borrow techniques from bond and equity markets and vice versa.
The documentation of syndicated loans generally depends on market practice and the commercial terms of the deal at hand. Market practice largely derives from the conventions of the London market, which are generally shaped by fi nan-cial history in its past and modern forms. Considering the number and size of transactions in London alone, there is sparse case law that is directly on syndicated loans in particular, loan agreements in general, or indeed all multi-bank fi nancing transactions. For the most part, the practitioners apply general principles of law in developing the law and practice of multi-bank fi nancing. The courts, mostly by applying the Anglo-American classical notion of freedom of contract, have adopted an approach that facilitates the growth of trade and fi nancial structures
vi
and practices. They have therefore been proactive in developing multi-bank fi nancing and international banking in general by interpreting contractual docu-ments in a manner that generally conforms to market practice. The regulators have equally played their part by creating an enabling environment for the further growth of these transactions.
The fi nancial industry is dynamic, and so is the world economy. There is bound to be further growth in multi-bank fi nancing transactions and the law and regula-tions that govern them. Further developments to, and indeed alternative interpre-tations of, the views presented in this book, are therefore inevitable and healthy.
Agasha MugashaBrentwood, Essex
1 May 2007
Preface
vii
ACKNOWLEDGEMENTS
I am truly grateful to the multitude of individuals and institutions that assisted in different ways and made the publication of this book possible. A selection stands out and deserves special mention. None of them, however, is responsible for any errors in this book, for which I am solely responsible.
This book was written in the course of my employment and benefi ted from the study leave scheme in the Department of Law at the University of Essex. It also received signifi cant support in the form of direct funding from the British Academy and the UK Arts and Humanities Research Council (AHRC). The research also benefi ted from the generosity of Osgoode Hall Law School of York University in Canada, and the American University Washington College of Law in the United States, where I held short appointments as a visiting scholar in the course of writ-ing the book. I am grateful to these institutions as well as to my colleagues and the administrative staff there.
This book would be lacking some essential parts if the following individuals in the United Kingdom (and indirectly their organizations) had not been generous with information: Mark Campbell at Clifford Chance, Graham Penn at Sidley Austin, Richard Calnan at Norton Rose, Tom Price and Sally Moore at Markit, Petra Hofer at Dealogic, Daren Kemp at Sidley Austin, two anonymous reviewers com-missioned by OUP, and Caroline Checkley, the Law Librarian at the University of Essex. The Loan Markets Association also kindly gave me access to its two recom-mended forms of primary documents.
Outside the United Kingdom, the Loan Syndications and Trading Association in New York (through Elliott Ganz) was very generous at all times. I also obtained useful information from Michael Avidon in New York; Daniel Bradlow, Michael Swetye and Frank Byamugisha in Washington, DC; Clint Calder in Toronto; Edwin Kikonyogo, Jeff Midzuk, Eric Le Grange and Graeme Tucker in Johannesburg; Martin Bandeebire in Kampala; and my former Essex LLM stu-dents Atiq Imdad Ali, Subir Chakraborty, Lingzhi Fu, Gozde Hascelik, Lee Mason, Zhang Min, Henry Nampandu, Boseda Olofi nmakin, Aurelie Payet, Qian Qian Wang, Shujin Yang, and Li Zhe.
Professor Benjamin Geva introduced me to syndicated loans and his continuing support is priceless, together with that of Professors John F Dolan and Jean-Gabriel Castel; John C Lancaster, Pearl Rozenberg, Kevin McGuinness, William Kanyesigye, Betty and John Nganwa, Maude Bishop, and my South African
viii
friends and academic colleagues, Mr Justice Frans Malan, Jopie Pretorius, Angela Itzikowitz, Charl Hugo, and Sarel Du Toit.
I needed permission from McGill-Queens University Press, which permission was kindly given, for me to publish this book with Oxford University Press because the book is on a similar topic to my earlier book, The Law of Multi-bank Financing (Syndications and Participations), which was published in Canada in 1997. I pub-licly acknowledge my gratitude to McGill-Queens University Press. It bears emphasis, though, that the two books are very different in substance even though inevitably I do express the same ideas or occasionally use the same text.
Finally, I am truly grateful to my family and friends who have always been there for me and have thus contributed immeasurably to this work.
Agasha MugashaBrentwood, Essex
1 May 2007
Acknowledgements
ix
CONTENTSSUMMARY
Table of Cases xxvTable of Legislation xxviiTable of European Directives xliTable of International Treaties and Conventions xliiiList of Tables xlvList of Figures xlviList of Abbreviations xlvii
1. Multi-Bank Financing: What It is and is Not 1 2. Multi-Bank Financing: Who Uses It, Where, and Why? 61 3. Arranging Syndicated Loans, Sub-participations,
and Loan Participations 99 4. The Nature of Credit Facilities used in Syndicated
Loans and Secondary Loan Markets 175 5. Syndicated Loans: Legal Relationships Between
the Borrower and Lenders, and among Syndicate Lenders 203 6. Loan Participations: Legal Relationships Between
the Lead Bank and Participants, Participants and Borrower, and Among Participants 271
7. Loan Sub-participations: Legal Relationships Between the Lead Bank and Sub-participant, and Borrower and Sub-participant 341
8. The Secondary Market for Syndicated Loans: Loan Trading, Credit Derivatives, and Collateralized Debt Obligations 353
9. The Agent Bank in Syndicated Loans and Loan Participations 403
10. Syndicated Loans and Borrower Insolvency: Winding-up and Workout Procedures 439
11. The Regulation of Syndicated Loans and the Secondary Loan Market Practices 471
12. Conclusion 513
xAppendix 1: Multicurrency Term Facility Agreement (Miranda Projects/The Prospero Group/Ariel Bank Ltd) 527
Appendix 2: LSTA Sample Par/Near Par Participation Agreement 585Appendix 3: LSTA Purchase and Sale Agreement for Distressed Trades 596Appendix 4: LSTA Assignment and Assumption 622Appendix 5: LSTA Model Transfer Provision 627
Index 631
ContentsSummary
xi
CONTENTS
Table of Cases xxvTable of Legislation xxviiTable of European Directives xliTable of International Treaties and Conventions xliiiList of Tables xlvList of Figures xlviList of Abbreviations xlvii
1. Multi-Bank Financing: What It is and is Not
I. Introduction 1.01
II. The Dynamism of Multi-Bank Financing 1.05A. Increasing Sophistication of Client Needs 1.06B. Impact of Economic Cycles 1.07C. Different Types of Financial Institutions and Methods 1.08D. Impact of Changing Regulations 1.09
III. Designation of Multi-Bank Financing 1.10A. Increasing Participation of Other Financial Institutions 1.13
IV. Description of Multi-Bank Financing Transactions 1.14A. Primary Transactions 1.15
1. The Syndicated Loan 1.15a. Common varieties of syndicated loans 1.17b. Niche-market syndicated loans 1.26
2. Club Deal Loans 1.31B. Secondary Loan Market Practices 1.35
1. Loan Participation and Loan Sub-participation: Early Differences between New York and London Practices 1.37
2. Loan Sub-participations 1.383. Loan Participations 1.40
a. General description 1.40b. Differentiation between types of loan participation 1.41
4. Transferable Loan Facilitiesa Historical Note 1.50a. Transferable loan certifi cates 1.51b. Transferable loan instruments 1.52c. Current practices 1.53
5. Loan Trading 1.546. Credit Derivatives 1.557. Collateralized Debt Obligations 1.58
xii
V. Multi-Bank Financing Contrasted with Similar Financing Techniques 1.61A. Introduction 1.61B. Multi-Bank Financing Contrasted with Equity
Syndications and Participations 1.63C. Multi-Bank Financing Contrasted with Capital
Market Methods 1.64D. Multi-Bank Financing Contrasted with International
Bonds/Eurobonds 1.65E. Multi-Bank Financing Contrasted with
Commercial Paper Programmes 1.68F. Multi-Bank Financing Contrasted with Securitization 1.70
1. Traditional Sale Structure 1.722. Sale of Assets to a Trustee of a Receivables Trust 1.73
VI. Conclusion 1.76
2. Multi-Bank Financing: Who Uses It, Where, and Why?
I. Introduction 2.01
II. The PartiesWho Uses Multi-Bank Financing? 2.02A. The Borrowers 2.02
1. Who are the Borrowers? 2.022. Regulation of the Borrowers 2.06
B. The Lenders and Investors 2.071. Banks 2.08
a. Different types of banks 2.08b. Regulation of banks 2.12
2. Non-Bank Financial Institutions 2.15a. Hedge funds 2.16b. Pension funds 2.19c. Insurance companies 2.20d. Collateralized debt obligations 2.21e. Building societies 2.22f. Equity funds 2.23g. Mutual funds and prime rate funds 2.24h. Finance companies 2.25i. Islamic fi nance 2.26j. Vulture funds 2.27k. International Finance Corporation 2.28l. Credit unions (cooperative credit associations) 2.29
III. Components of the Financial MarketWhere Multi-Bank Financing Occurs 2.30A. Domestic Market 2.31B. Foreign Market 2.32
Contents
xiii
C. International Financial Marketthe Euromarket 2.331. The Concept and Origins of the Eurocurrency 2.342. The Development of the Eurodollar Market 2.353. Characteristics and Advantages of the Euromarket 2.36
a. Regional markets 2.38
IV. The RationaleWhy Parties Use Multi-Bank Financing 2.39A. The Borrower 2.40
1. Advantages of Syndicated Loans 2.402. Advantages of Loan Trading and Other
Secondary Loan Market Methods 2.43B. The Banks 2.44
1. Advantages of Syndicated Loans 2.45a. The diversifi cation of the risk of non-payment 2.46b. Complying with regulations 2.47c. Earning arrangement fees 2.48d. Increasing prestige and publicity 2.49e. Developing profi table relationships 2.50
2. Reasons for Secondary Loan Market Practices 2.51a. Note on credit derivatives 2.52b. Sale considerations 2.53c. Purchase considerations 2.62
V. Conclusion 2.68
3. Arranging Syndicated Loans, Sub-participations, and Loan Participations
I. Introduction 3.01
II. Arranging Syndicated Loans 3.03A. Procedure in Brief 3.03
1. Key Roles 3.062. Effect of Electronization on Documentation 3.103. Self-arranged Syndicated Loans 3.11
B. Detailed Procedure 3.141. Originating the Loan 3.14
a. The offer and the mandate 3.16b. Types of offer 3.17c. Legal effect of the mandate 3.25d. Arrangers potential liability to the borrower 3.40
2. Negotiating the Loan 3.483. Marketing the Loan 3.50
a. Finalizing the syndicate group 3.52b. Preparing the information package or memorandum 3.53c. Dealing with professional advisers 3.56d. Liability for inaccurate or erroneous information 3.57
4. Action in Contract or Tort? 3.635. Arrangers Potential Liability to the Participants 3.64
Contents
xiv
6. Misrepresentation 3.67a. Effective misrepresentation 3.68b. Materiality 3.71c. Inducement and reliance 3.72
7. Heads of ActionSpecifi c Categories of Misrepresentation 3.76a. Fraudulent misrepresentation 3.77b. Negligent misrepresentation 3.80c. Innocent misrepresentation 3.100d. Statutory misrepresentation 3.102e. Overseas statutory regimes 3.113
8. Negligence 3.114 9. Breach of Fiduciary Duty 3.11510. Obviating Liability for Misinformation or Non-information 3.132
a. Exemption or disclaimer clauses 3.132b. Due diligence 3.139c. Involving the participants 3.140d. Indemnity from the borrower 3.141
III. Arranging Loan Participations and Sub-participations 3.142A. Arranging a Loan Sub-Participation 3.142B. Loan Participation Procedures 3.143C. Liability Arising from the Selling Process 3.147
IV. Conclusion 3.148
4. Nature of Credit Facilities Used in Syndicated Loans and Secondary Loan Markets
I. Introduction 4.01
II. Direct Loans 4.03A. Money Loans 4.04B. Overdraft Facilities 4.07
III. Documentary Credits 4.09A. Overview of Letters of Credit 4.09B. Syndications of Documentary Credits 4.11
1. One Bank Issues a Documentary Credit for its Own Account 4.13
2. One Bank Issues a Documentary Credit on behalf of the Syndicate 4.14
3. Each Bank Issues its Own Documentary Credit 4.15C. Participations of Documentary Credits 4.17
1. Introduction 4.172. Participations Granted by the Issuing Bank 4.213. Participations Granted by the Confi rming Bank 4.234. Participations Granted by the Nominated Bank 4.26
Contents
xv
IV. Bank Guarantees and Standby Letters of Credit 4.29A. Introduction 4.29B. Syndications of Bank Guarantees 4.33
1. Motives Behind Syndications of Bank Guarantees 4.332. The Syndication Procedure 4.343. Specifi c Types And Purposes of Bank Guarantees 4.38
a. Tender guarantee 4.39b. Advance payment or repayment guarantee 4.40c. Performance guarantee 4.41
C. Syndications of Direct Pay Standby Letters of Credit 4.45D. Participations of Bank Guarantees and Standby Credits 4.47
V. Bankers Acceptances 4.51A. Bankers Acceptances as a Funding Facility 4.51B. Syndications of Bankers Acceptances 4.56C. Participations in Bankers Acceptances 4.58
1. Risk Participations 4.592. Generic Participations 4.603. Observations 4.62
VI. Conclusion 4.64
5. Syndicated Loans: Legal Relationships Between the Borrower and Lenders, and among Syndicate Lenders
I. Introduction 5.01
II. The Legal Nature of the Syndication Arrangement 5.06A. Importance of Determining the Legal Nature 5.06B. Legal Nature of the Syndication Arrangement 5.07
1. Separate Loans 5.082. Joint Tenancy or Joint Venture 5.143. Partnership 5.15
III. Contractual Provisions in a Syndicated Loan Agreement 5.16A. Key Determinants of Loan Classifi cations and Terminology 5.19B. Key Features of Euroloan Lending 5.20
1. The Concept of Matched Funding 5.202. The Concept of Net Lending (Yield Protection) 5.21
C. Legal Relations between the Lenders and the Borrower 5.231. Defi nitions 5.242. The Facility 5.253. Purpose and Utilization of the Facility 5.264. Payments, Repayment and Prepayment 5.28
a. Payment of interest 5.29b. Repayment of principal 5.35c. Prepayment and cancellation 5.37
Contents
xvi
d. Payment of fees, costs, and expenses 5.41e. Payment of taxes 5.42
5. Security, Guarantees, and Insurance 5.43a. Security 5.43b. Guarantees, indemnity, and support arrangements 5.47c. Insurance 5.51
6. Conditions Precedent 5.52 7. Representations and Warranties 5.56
a. Pari passu 5.58b. Material adverse change clause 5.60
8. Undertakings 5.63a. Informational undertakings 5.64b. Financial covenants 5.65c. General undertakings 5.69
9. Amendments, Waivers, and Consents 5.7010. Default 5.75
a. Events of default 5.76b. Problems with cross-default clauses 5.79c. Consequences of default 5.83
11. Change of Parties and Transfers of Loan Interests 5.94a. Methods of transferring loan interests 5.95b. Conditions of assignment or transfer 5.96c. Change of lenders 5.97
12. Governing Law, Jurisdiction, and Service of Process 5.9913. Legal Opinions 5.10314. Miscellaneous Provisions 5.105
D. Legal Relationships Among the Lenders 5.1061. Sharing Payments 5.106
a. The Iranian crisis 5.109b. The Argentinian crisis 5.110c. Sovereign debt-restructuring 5.112d. Double-dipping 5.113e. Cross-jurisdictional and cross-currency set-off 5.114f. Other aspects 5.115
2. Majority Voting 5.116E. Legal Relationships Between the Lenders and the Agent Bank 5.124
IV. Conclusion 5.125
6. Loan Participations: Legal Relationships Between the Lead Bank and Participants, Participants and Borrower, and Among Participants
I. Introduction 6.01
Contents
xvii
II. Lead Bank and Participant Relationship 6.08A. The Legal Nature of the Participation Arrangement 6.10
1. Analysis 6.12a. Sale theory: assignor-assignee relationship 6.13b. Debt theory: creditor-debtor relationship 6.21c. Ownership in common or tenancy in common 6.26d. Partnership or joint venture 6.27e. Trust 6.32f. Agency 6.37
B. Economic Consequences of Characterization 6.411. Borrowers Insolvency 6.42
a. Set-off by the lead bank 6.43b. Set-off by the participant 6.46c. Entitlement to collateral and other collections 6.49
2. Lead Banks Insolvency 6.51a. Set-off by the borrower 6.52b. Set-off and other claims by the participant 6.53
3. Participants Insolvency 6.68C. Form of the Participation Agreement 6.74
1. Oral Participation Agreements 6.742. Written Participation Agreements 6.76
a. Conclusion of the contract 6.79b. Precedence of documents 6.80c. Admissibility of extrinsic evidence 6.82
D. Contents of the Participation Agreement: Contractual Rights and Duties 6.871. Credit Information 6.91
a. Allocation of the credit risk 6.942. Initial and Subsequent Funding 6.95
a. Initial funding 6.96b. Subsequent funding 6.97c. Failure to fund the loan 6.98
3. Receipts, Collections, and Expenses 6.99a. Lead banks duty to collect the loan 6.100b. Sharing and appropriation of collections 6.102c. Apportionment of costs and expenses 6.104
4. Servicing the Loan 6.108a. The servicing function 6.108b. Termination of servicing 6.110
5. Modifi cations and Waiver 6.1116. Default and Enforcement 6.1157. Risks and Standard of Care 6.1208. Assignment of the Loan 6.1229. Representations and Warranties 6.125
a. Conditions precedent 6.127
Contents
xviii
10. Breach and Non-Performance 6.128a. Elevation 6.129b. Subrogation 6.130
11. Miscellaneous Provisions 6.13112. Implied Terms 6.132
a. Presumptions about participation agreements 6.133b. Fiduciary obligations 6.135c. Duty of good faith and fair dealing 6.136d. Duty to use reasonable care 6.140e. Observations 6.141
III. Participant-Borrower Relationship 6.142
IV. Participant-Participant Relationship 6.144
V. Conclusion 6.152
7. Loan Sub-participations: Legal Relationships Between the Lead Bank and Sub-participant, and Borrower and Sub-participant
I. Introduction 7.01A. Description of Sub-participation 7.03
1. Funded Sub-participation 7.042. Risk Sub-participation 7.05
II. Legal Relationships in Sub-participation Arrangement 7.06A. Legal Nature of a Sub-participation Arrangement 7.06
1. The Lead BankSub-participant Relationship 7.062. The Sub-participant and the Borrower 7.10
B. The Sub-participation Agreement 7.111. Form of the Agreement 7.112. Delivery of Documents 7.123. Confi dentiality 7.134. Payment of the Sub-participation 7.145. Distributions 7.15
a. Distributions in cash 7.16b. Distributions not in cash 7.17c. Shortfall in distributions of interest or fees 7.18d. Contingent receipt of payment 7.19
6. Representations and Warranties 7.20a. Representations and warranties by the lead bank
and sub-participant 7.20b. Representations and warranties by the lead bank 7.21c. Exclusion of warranties and representations 7.22
7. Confi rmations by the Sub-participant 7.238. Undertakings by the Lead Bank 7.249. Administration of the Sub-participation 7.25
Contents
xix
10. Indemnities 7.2611. Transfers 7.2712. Governing Law 7.2813. Jurisdiction 7.2914. Other provisions 7.30
8. The Secondary Market For Syndicated Loans: Loan Trading, Credit Derivatives, and Collateralized Debt Obligations
I. Introduction 8.01
II. Loan Trading 8.03A. Past Obstacles to Loan Trading 8.04B. The Legal Framework for Loan Trading 8.06
1. Methods of Transferring Property InterestsCommon Law Principles 8.12a. Novation 8.12b. Assignment 8.16c. Declaration of trust 8.34d. Charges 8.42
C. Reasons for Loan Trading 8.44D. Development of the Systems for Loan Trading 8.45
1. Objective Pricing 8.462. Loan Rating 8.473. Loan Identifi cation 8.484. Industry Body Support 8.495. Financial Institution Involvement 8.506. Use of the Internet 8.51
E. Legal and Regulatory Issues 8.541. Loan Trading Contractsthe Courts Approach 8.532. Transfer of Loan Interests 8.553. Transfer in Breach of Express ProhibitionRequirement
for Consent 8.564. Confi dentiality 8.575. Set-off 8.586. Prudential Concerns 8.59
III. Credit Derivatives 8.60A. Description of Credit Derivatives 8.60B. Advantages of Credit Derivatives 8.61C. Types of Credit Derivatives 8.63
1. Credit Default Swap 8.642. CDS Squared 8.673. Total Return Swap and Total Rate of Return Swap 8.684. Credit Linked Note 8.715. Repackaged Note 8.73
Contents
xx
D. Legal and Regulatory Issues 8.741. Legal Issues 8.74
a. Mis-selling of products 8.75b. Enforceability and interpretation of the contractual
documents 8.76c. Transfer of property interests 8.79
2. Regulatory Issues 8.80a. Provisioning for operational risk 8.80b. Are credit derivatives insurance business or insurance
contracts? 8.82c. Is a credit derivative a gaming or wagering contract? 8.85
IV. Collateralized Debt Obligations 8.86A. A Description of CDOs 8.86B. Why CDOs are Appealing 8.87C. Types of CDOs 8.88
1. Underlying Assets 8.892. Arbitrage versus Balance Sheet CDOs 8.903. Cash versus Synthetic CDOs 8.934. Static versus Managed CDOs 8.975. Cashfl ow versus Market Value CDOs 8.99
D. Legal Issues 8.1011. Jurisdiction of the SPV 8.1012. Transfer of Assets 8.102
a. Effective transfer 8.102b. True sale opinions 8.103c. Consent requirements 8.104
3. Set-off 8.1054. Lender Liability 8.106
V. Conclusion 8.107
9. The Agent Bank in Syndicated Loans and Loan Participations
I. Introduction 9.01
II. General Approach to the Agent Banks Legal Status and Functions 9.04A. True Agent or Special Agent Debate 9.06
1. Agent Bank as a True Agent 9.07a. True agent with fi duciary duties 9.07b. True agent disclaiming fi duciary duties 9.08
2. Agent Bank as a Special Agent 9.09B. Analysis 9.10
1. Meaning of the Word Agent 9.112. The Duties of the Agent Bank 9.12
Contents
xxi
3. The Authority of the Agent Bank 9.144. Observations 9.15
III. Contents of the Agency Clause 9.17A. General Principles of Law 9.17
1. Duty to Exercise Due Care and Skill 9.182. Implied DutiesFiduciary Duties 9.193. Authority of the Agent Bank 9.23
a. Express actual authority 9.27b. Implied actual authority 9.28
B. Specifi c Aspects of the Agency Clause 9.321. Appointment and Authorization 9.33
a. Irrevocability of the appointment 9.35b. Delegation to the agent bank 9.36
2. Duties of the Agent Bank 9.38a. Checking that the conditions precedent
have been satisfi ed 9.41b. Receiving utilization requests 9.42c. Administering interest periods 9.43d. Administering interest rates and mandatory costs 9.44e. Dealing with market disruption events 9.45f. Administering foreign exchange transactions
and multi-currency facilities 9.47g. Calculating limits for availability, tranches,
fronting banks, and swinglines 9.48h. Calculating and requesting fees and general expenses 9.49i. Acting as a conduit for information 9.50j. Monitoring fi nancial covenants 9.51k. Acting as a conduit for payments 9.52l. Checking certain types of information 9.53m. Transfers of lenders commitments
and changes to borrowers and guarantors 9.54n. Waivers, amendments, and consent 9.55o. Handling events of default and organizing banking
meetings 9.563. Protections Given to the Agent Bank 9.584. Confl ict of Interests 9.635. Additional Remuneration 9.656. Use of Confi dential Information 9.667. Reimbursement and Indemnifi cation of the Agent 9.678. Termination and Replacement of the Agent Bank 9.69
IV. Conclusion 9.72
Contents
xxii
10. Syndicated Loans and Borrower Insolvency: Winding-up and Workout Procedures
I. Introduction 10.01A. Practical Considerations Concerning Insolvency Procedures 10.05B. Meaning of Insolvency 10.11
1. Commercial Insolvency 10.122. Balance-sheet Insolvency Test 10.13
II. Formal Statutory Insolvency Proceedings 10.15A. Winding-up or Liquidation 10.16
1. Winding-up by the Court 10.172. Voluntary Winding-upa Brief Note 10.183. Legal Consequences of Winding-up on Syndicated Loans 10.19
a. Capacity to conduct winding-up proceedings 10.20b. Legal proceedings and enforcement of claims 10.21c. Disposition of property 10.22d. Completion of the agreement 10.23e. Obligations of the borrower 10.24f. The companys business 10.25g. Managementappointment of the liquidator 10.26h. Distribution of assets 10.27
B. Administrative ReceivershipLimited Application 10.29
III. Rescue and Restructuring Methods and Procedures 10.33A. A Brief Comparison of English and US Law Procedures 10.35B. Administration 10.36
1. Commencement of Administration 10.392. Basic Mechanics of Administration 10.403. Consequences of Administration Relevant
to Syndicated Loans 10.41C. Company Voluntary Arrangement 10.43
1. The Company Voluntary Arrangement Process 10.462. Small Companiesa Note 10.53
D. The London Approach 10.551. Main Features of the London Approach 10.56
a. Information gathering 10.57b. The standstill period 10.58c. Interbank issues 10.59d. Financial support 10.61e. Subsequent developments 10.62
IV. Conclusion 10.63
Contents
xxiii
11. The Regulation of Syndicated Loans and the Secondary Loan Market Practices
I. Introduction 11.01
II. Regulation of Capital Adequacy 11.02A. Introducing Basel II 11.02B. Three Approaches to Measuring Credit Risk 11.08
1. Standardized Approach 11.092. Internal Ratings-based ApproachesFoundation
and Advanced 11.10C. Calculation of Minimum Capital Requirements 11.12
1. Regulatory Capital 11.132. Risk Weighting 11.14
a. Claims on sovereigns 11.16b. Claims on banks 11.17c. Claims on securities fi rms 11.18d. Claims on corporates 11.19e. Higher risk categories 11.20f. Off-balance sheet items 11.21
3. Credit Risk Mitigation 11.22a. Collateralized transactions 11.23b. On-balance sheet netting 11.24c. Guarantees and credit derivatives 11.25
4. Securitization Framework 11.26D. Regulating Capital Adequacy in the United Kingdom
Implementation of Basel II 11.281. Exposure Reclassifi cation 11.312. Asset Management TechniquesGenerally 11.33
a. Transfer of loan assets 11.34b. Novation 11.36c. Assignment 11.37d. Declaration of trust 11.38e. Sub-participation 11.39f. Undrawn commitments 11.40
3. Commitments to Lend 11.414. Credit Risk Mitigation Techniques 11.42
a. Financial collateral 11.43b. Non-Financial collateral 11.44c. Guarantees and credit derivatives 11.45d. Netting of fi nancial obligations 11.46
III. Regulation of Large Loan Exposures 11.49
IV. Regulation of Debentures 11.51
Contents
xxiv
V. Prohibition of Market Abuse 11.52A. Syndications Practice Generally 11.55B. Secondary Loan Trading 11.57C. Securitization 11.58
VI. Environmental and Social Regulation 11.60A. The Equator Principles 11.61
1. Description 11.612. Background to the Equator Principles 11.653. The Content of the Equator Principles 11.71
a. Preamble 11.72b. Scope 11.74c. Statement of principles 11.76d. Action planenvironmental management system 11.80e. Financial institution reporting and independent
monitoring 11.85B. An Early Critique of the Equator Principles 11.86
VII. Conclusion 11.89
12. Conclusion
I. Introduction 12.01A. Summary 12.04B. Law and Regulation 12.08
II. Future Directions 12.16A. General 12.16B. The Conceptual-Functional Approach to
Multi-Bank Financing 12.18C. Standardization and Harmonization for Syndicated Loans
and Secondary Loan Market Practices 12.21
Appendix 1: Multicurrency Term Facility Agreement (Miranda Projects/The Prospero Group/Ariel Bank Ltd) 527
Appendix 2: LSTA Sample Par/Near Par Participation Agreement 585Appendix 3: LSTA Purchase and Sale Agreement for Distressed Trades 596Appendix 4: LSTA Assignment and Assumption 622Appendix 5: LSTA Model Transfer Provision 627
Index 631
Contents
11
MULTI-BANK FINANCING: WHAT IT IS AND IS NOT
I. Introduction 1.01 II. The Dynamism of Multi-Bank
Financing 1.05A. Increasing Sophistication of
Client Needs 1.06B. Impact of Economic Cycles 1.07C. Different Types of Financial
Institutions and Methods 1.08D. Impact of Changing Regulations 1.09
III. Designation of Multi-Bank Financing 1.10A. Increasing Participation of Other
Financial Institutions 1.13
IV. Description of Multi-Bank Financing Transactions 1.14A. Primary Transactions 1.15
1. The Syndicated Loan 1.15a. Common varieties of
syndicated loans 1.17b. Niche-market syndicated
loans 1.262. Club Deal Loans 1.31
B. Secondary Loan Market Practices 1.351. Loan Participation and Loan
Sub-participation: Early Differences between New York and London Practices 1.37
2. Loan Sub-participations 1.383. Loan Participations 1.40
a. General description 1.40b. Differentiation between
types of loan participation 1.41
4. Transferable Loan Facilities a Historical Note 1.50a. Transferable loan
certifi cates 1.51b. Transferable loan
instruments 1.52c. Current practices 1.53
5. Loan Trading 1.546. Credit Derivatives 1.557. Collateralized Debt
Obligations 1.58
V. Multi-Bank Financing Contrasted with Similar Financing Techniques 1.61A. Introduction 1.61B. Multi-Bank Financing Contrasted
with Equity Syndications and Participations 1.63
C. Multi-Bank Financing Contrasted with Capital Market Methods 1.64
D. Multi-Bank Financing Contrasted with International Bonds/Eurobonds 1.65
E. Multi-Bank Financing Contrasted with Commercial Paper Programmes 1.68
F. Multi-Bank Financing Contrasted with Securitization 1.701. Traditional Sale Structure 1.722. Sale of Assets to a Trustee of a
Receivables Trust 1.73
VI. Conclusion 1.76
Multi-Bank Financing: What It is and is Not
2
I. Introduction
This introductory chapter describes the different types and phases of multi-bank fi nancing and distinguishes multi-bank fi nancing from similar transactions. These initial remarks are completed in chapter 2, which describes who uses multi-bank fi nancing, where, and why.
Multi-bank fi nancing occurs when a number of banks act in concert to extend credit to a borrower. The combination of the banks is usually highly coordinated, but in some cases the banks act in loose associations that are linked only by the simultaneous extension of credit to a borrower. The two main phases of multi-bank fi nancing are the syndicated loan and secondary loan market practices. In a syndicated loan, several banks simultaneously make a loan to a borrower on the basis of a single set of loan documents. A mandated lead arranger (or simply the arranger) originates and puts together the loan; a bookrunner keeps the records and distributes the loan to the various lenders; an agent bank administers the loan; and the participants provide the funds. In a secondary loan market practice (there are different types), the banks interest in the loan is sold or otherwise transferred to other banks or fi nancial institutions. The common methods for doing this are the sub-participation, loan participation, loan trading, credit derivatives, and collateralized debt obligations. Viewed together, the two phases of multi-bank fi nancing comprise a group of related credit-and-risk-transfer techniques that permit the participants in the fi nancial markets to manage their credit and risk more precisely.
There is considerable diversity in the terminology used to refer to the key fi nancial practices discussed in this book. Some key wordssuch as syndication, arranger, participation, sub-participation, and participantare not terms of art. They are ordinary English words that may be used in different contexts to mean different things. This observation holds true both in the fi nancial community and in legal literature where the terms syndication, participation, and sub-participation are frequently used in their ordinary meaning, sometimes inter-changeably and at other times complementarily. Occasionally, too, the words are qualifi ed by adjectives or used interchangeably with others such as primary syn-dication, true syndication, simple syndicate, secondary syndication, direct or indirect participation, silent participation, and sub-participation. It is there-fore important for readers to pay particular regard to the substance of the fi nancial practices and also to be consistent with the labels used in any particular discus-sion. This book ascribes to the fi nancial practices it discusses the labels and mean-ing commonly attached to them in euroloan practices, as practiced principally in London in the United Kingdom. There is also some inevitable use of terminology from industry practices in New York because of the overlapping practices in the
1.01
1.02
1.03
3two leading international fi nancial centres of London and New York. In the last decade the major participants in the syndicated loans market have been develop-ing common terminology and standard practices and documents that are increas-ingly used by the leading industry players. These documents, particularly those made under the auspices of the Loan Markets Association (LMA) and Loan Syndication and Trading Association (LSTA), are fairly representative of current practice and are discussed in this book as such.
Table 1.1 below, illustrates the syndicated loans market by showing the state of the market in the three years up to the end of 2006. The diagram illustrates total amounts and the types of the leading fi nancial institutions involved.
II. The Dynamism of Multi-Bank Financing
Multi-bank fi nancing techniques continue to evolve. The factors behind the evo-lution have impacted on the legal documentation for the transactions and also explain some of the cases that have come before the courts. The modern practice of syndicated loans and secondary loan market practices can fairly be described as one where banks are trying to satisfy the increasingly sophisticated needs of their clients in a competitive environment that involves many different types of fi nan-cial institutions and against the background of a complex and demanding regula-tory environment. It is therefore appropriate to mention briefl y at this point some of the important drivers of modern practices. The remarks are further explained in chapter 2 and the remainder of the book.
A. Increasing Sophistication of Client Needs
Multi-bank fi nancing developed simultaneously as a domestic and international facility. The borrowers are usually large and sophisticated entities that are aware of, and have access to, other types of fi nancing as well. They would thus seek to obtain the cheapest source of funds and will switch lenders if necessary. Their needs are also varied and may simultaneously be domestic or international. Often the borrower is a conglomerate or holding company whose fi nancing needs require a combination of different fi nancing facilities. The consequence is that the lenders are continually adapting as they seek to accommodate varied and sophisticated clients. In some cases the borrowers have been known to specify the composition of the lending institutions or the size of the lending group. The borrowers also fre-quently have an eye to the bond market, and may borrow by way of syndicated loan as a bridge fi nancing to a later bond issue. There are thus many short-term loans in the region of twelve to eighteen months which the borrower expects to refi nance in the bond market, as well as loans with longer tenors.
The Dynamism of Multi-Bank Financing
1.04
1.05
1.06
Multi-Bank Financing: What It is and is Not
4
Tab
le 1
.1 T
op le
nder
s for
glo
bal s
yndi
cate
d lo
ans,
200
420
06
2006
4 20
05
Ran
kLe
nder
Par
ent
Dea
l Val
ue ($
) (m
)N
o.%
shar
eR
ank
Lend
er P
aren
tD
eal V
alue
($) (
m)
No.
%sh
are
1JP
Mor
gan
261,
589.
781,
739
6.54
1JP
Mor
gan
215,
508.
871,
779
6.24
2C
itig
roup
211,
276.
311,
379
5.28
2C
itig
roup
178,
868.
061,
444
5.18
3B
anc
of A
mer
ica
178,
318.
951,
840
4.45
3B
anc
of A
mer
ica
147,
214.
931,
973
4.26
4D
euts
che
Ban
k12
9,91
6.50
718
3.25
4B
NP
Pari
bas
110,
242.
791,
393
3.19
5R
BS
128,
114.
8990
43.
205
Mit
subi
shi U
FJ F
inan
cial
G
roup
106,
509.
191,
931
3.08
6M
itsu
bish
i UFJ
Fin
anci
al
Gro
up11
5,56
4.89
2,10
42.
896
AB
N A
MR
O10
5,70
3.83
1,33
13.
06
7B
NP
Pari
bas
113,
925.
851,
214
2.85
7D
euts
che
Ban
k10
4,34
9.59
789
3.02
8B
arcl
ays C
apit
al10
1,97
3.13
643
2.55
8R
BS
97,3
71.9
398
22.
829
AB
N A
MR
O96
,574
.39
1,20
32.
419
Bar
clay
s Cap
ital
96,9
28.2
079
12.
8010
Wac
hovi
a89
,355
.93
1,20
12.
2310
HSB
C86
,093
.45
1,09
72.
4911
Miz
uho
88,3
03.4
91,
781
2.21
11C
alyo
n84
,069
.75
1,02
22.
4312
Cre
dit S
uiss
e84
,659
.81
523
2.11
12W
acho
via
79,3
89.9
81,
251
2.30
13C
alyo
n84
,218
.33
936
2.10
13C
redi
t Sui
sse
73,3
40.3
355
52.
1214
HSB
C76
,340
.42
877
1.91
14M
izuh
o72
,057
.25
1,68
32.
0815
Gol
dman
Sac
hs76
,185
.41
324
1.90
15SG
Cor
pora
te &
In
vest
men
t Ban
king
69,5
77.6
084
12.
01
16SG
Cor
pora
te &
In
vest
men
t Ban
king
65,1
24.4
173
41.
6316
Sum
itom
o M
itsu
i Ban
king
C
orp
59,4
50.5
01,
452
1.72
17Su
mit
omo
Mit
sui B
anki
ng
Cor
p61
,215
.37
1,52
31.
5317
ING
50,3
19.9
973
71.
46
18M
orga
n St
anle
y52
,375
.67
270
1.31
18U
BS
46,4
07.9
142
61.
3419
Scot
ia C
apit
al51
,215
.37
620
1.28
19N
ATIX
IS44
,650
.69
596
1.29
20U
BS
51,0
97.5
042
11.
2820
Scot
ia C
apit
al44
,336
.95
564
1.28
Su
btot
al2,
117,
346.
407,
879
52.9
0
Subt
otal
1,87
2,39
1.80
7,51
354
.17
To
tal
4,00
2,83
4.32
9,42
710
0.00
To
tal
3,45
6,33
0.03
8,64
910
0.00
5The Dynamism of Multi-Bank Financing
2004
To
tal
Ran
kLe
nder
Par
ent
Dea
l Val
ue ($
) (m
)N
o.%
shar
eR
ank
Lend
er P
aren
tD
eal V
alue
($) (
m)
No.
%sh
are
1JP
Mor
gan
17
9,57
4.79
1,74
16.
851
JP M
orga
n65
6,67
3.45
5,25
96.
522
Ban
c of
Am
eric
a
125,
291.
981,
893
4.78
2C
itig
roup
511,
958.
934,
105
5.08
3C
itig
roup
12
1,81
4.56
1,28
24.
653
Ban
c of
Am
eric
a45
0,82
5.87
5,70
64.
474
AB
N A
MR
O
91,
937.
011,
249
3.51
4D
euts
che
Ban
k31
9,90
6.42
2,29
23.
175
Deu
tsch
e B
ank
8
5,64
0.34
785
3.27
5B
NP
Pari
bas
309,
443.
703,
869
3.07
6B
NP
Pari
bas
8
5,27
5.06
1,26
23.
256
Mit
subi
shi U
FJ
Fina
ncia
l Gro
up30
3,14
3.70
5,49
43.
01
7M
itsu
bish
i UFJ
Fin
anci
al
Gro
up
81,
069.
631,
459
3.09
7R
BS
298,
201.
852,
737
2.96
8B
arcl
ays C
apit
al
78,
706.
3578
43.
008
AB
N A
MR
O29
4,21
5.23
3,78
32.
929
RB
S
72,
715.
0285
12.
789
Bar
clay
s Cap
ital
277,
607.
682,
218
2.75
10W
acho
via
6
9,37
2.60
1,19
62.
6510
Wac
hovi
a23
8,11
8.51
3,64
82.
3611
HSB
C
65,
721.
6793
32.
5111
Cal
yon
229,
937.
112,
831
2.28
12C
alyo
n
61,
632.
5587
32.
3512
HSB
C22
8,15
5.55
2,90
72.
2613
Cre
dit S
uiss
e
55,
985.
2256
32.
1413
Cre
dit S
uiss
e21
3,98
5.36
1,64
12.
1214
SG C
orpo
rate
& In
vest
men
t B
anki
ng
47,
732.
8868
81.
8214
Miz
uho
200,
282.
434,
291
1.99
15Su
mit
omo
Mit
sui B
anki
ng
Cor
p
44,
598.
111,
063
1.70
15SG
Cor
pora
te &
In
vest
men
t Ban
king
182,
434.
902,
263
1.81
16M
izuh
o
39,
921.
6882
71.
5216
Sum
itom
o M
itsu
i B
anki
ng C
orp
165,
263.
984,
038
1.64
17Sc
otia
Cap
ital
3
7,76
0.22
553
1.44
17G
oldm
an S
achs
144,
590.
2181
31.
4318
ING
3
7,14
5.55
691
1.42
18U
BS
134,
499.
591,
283
1.33
19U
BS
3
6,99
4.17
436
1.41
19Sc
otia
Cap
ital
133,
312.
541,
737
1.32
20N
ATIX
IS
34,
094.
7845
61.
3020
ING
131,
892.
642,
006
1.31
Su
btot
al1,
452,
984.
185,
847
55.4
5
Subt
otal
5,42
4,44
9.64
21,2
6853
.82
To
tal
2,62
0,18
5.85
6,71
610
0.00
To
tal
10,0
79,3
50.1
924
,792
100.
00
Sour
ce: D
ealo
gic
Multi-Bank Financing: What It is and is Not
6
B. Impact of Economic Cycles
The usual economic cycles affect (1) the number of loan transactions, (2) the size of the loan facilities, (3) pricing for the loans, (4) default rates, and (5) institu-tional demand for secondary trading. A buoyant economy with low default rates encourages lenders to commit to large loans and more frequently, whereas a con-tracting economy usually results in a more cautious approach in the number of transactions and the terms on which the loans are made. A deteriorating economy with high default rates spurs the secondary market in distressed loans.
C. Different Types of Financial Institutions and Methods
The early syndicated loans were simple structures assembled exclusively or nearly so among banks. The transactions are no longer simple and they are no longer exclusive to banks. Nowadays other types of fi nancial institutions are actively involved and include collateralized loan obligations (CLOs), hedge funds, pension funds, and insurance companies to mention but a few1 Many of these institutions are by nature investors and not lenders and they bring with them different requirements and methods of operation. They also have different com-mitments to the business activity of lending and apply different criteria before they get involved. In the secondary loan markets, for example, the investors require loan interests to be rated and require credit risk to be packaged in a certain way before they can invest in it. This in turn impacts on the documentation for primary documents as well because syndicated loans are typically made in con-templation of a future transfer. Decades ago borrowers could tap funding either by way of syndicated loan, capital market borrowing, or equity fi nancing. To date, the three methods interact signifi cantly. Loan markets routinely borrow tech-niques from bond and equity markets and the funding was provided by different institutions. It is generally acknowledged that there is increasing convergence of the methods of syndicated loans and capital markets. This development has been enhanced by the increasing participation of non-bank fi nancial institutions in syndicated loans. However, the apparent convergence extends only to similarity in procedures and the ultimate economic benefi t. Each method remains intact in its own right, serves its original purpose, and coexists with the other two. The convergence of fi nancing methods and the participating institutions makes it clear that the traditional stance of regulation according to institution is no longer appropriate. The trend for regulation seems to focus on equality of treatment for the fi nancial institutions and securities concerned. This seeks to avoid regulatory
1 See ch 2 below.
1.07
1.08
7arbitrage and also reduces the likelihood of regional, jurisdictional, or industry concentrations of risk driven by regulatory considerations.
D. Impact of Changing Regulations
In the early days, banks syndicated loans either because they could not individu-ally raise the amount required by the borrower or because the banks wanted to diversify the risk of lending. These origins, while still important, are no longer the main drivers of multi-bank fi nancing. Globally and domestically there have been fairly continuous changes in the regulatory environment and this has a direct impact on the business of syndicated loans and related practices. Perhaps the most noteworthy regulatory measure that has directly affected syndicated loans and related practices is capital adequacy regulation. The fi rst capital adequacy regula-tions (Basel I)2 had a dramatic impact on the practice of syndicated loans by con-straining the overall size of the lending portfolios of individual leading international banks. The operative capital adequacy regulations (Basel II)3 refi ne the calculation of the capital required of individual banks by further distinguishing between different assets and types of risk. Again, the regulations are affecting the business of syndicated loans and related practices by differentiating between types of assets, which affects the choices that banks make. Other regulations that have had an impact on syndicated loans are those that place limits on large exposures, thus effectively putting a limit on how much a bank can lend to an individual bor-rower or group of related borrowers. Furthermore, the more liberal regulatory environment now permits different types of fi nancial institutions to participate in syndicated loans (previously some did not) which means the market is more liquid but also more demanding because different institutions specify different requirements.
III. Designation of Multi-Bank Financing
The label multi-bank is a misnomer for the range of activity and institutions covered in this book. Multi-bank fi nancing suggests that two or more banks together fi nance a borrower. However, many types of non-bank fi nancial institutions actively take part in these deals and the trend is set to continue. It is appropriate, therefore, to inquire why the narrower multi-bank label is suitable for practices that include institutions other than banks. The label multi-bank is
2 Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards (July 1988) as amended.
3 Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, A Revised Framework (November 2005).
Designation of Multi-Bank Financing
1.09
1.10
Multi-Bank Financing: What It is and is Not
8
justifi ed because it captures the practical reality that banks historically occupied and still occupy the pivotal role in syndicated loans and secondary loan market practices. Banks remain the primary source for corporations that wish to borrow by way of loans. Furthermore, commercial lending is the main business activity of banks as a group as contrasted to other fi nancial institutions, and most banks are primarily and regularly engaged in primary lending. In the practice of syndi-cated loans and secondary market practices, the banks occupy a central position because they are the main initiators of the transactions, they participate in greater numbers than any other type of fi nancial institution, and they frequently advance the largest portion of the value of the funds. While it is the case that the institu-tional investors in recent years do provide large amounts of capital in the primary and secondary markets that sometimes exceed those of banks, it is rare for a non-bank fi nancial institution to maintain an on-going leading role in a syndicated loan beyond the structuring of the loan. Banks set the agenda in this area, hence the label multi-bank fi nancing.4
In law, lending is one of the twin elements (the other one being the taking of deposits) that have consistently been recognized as the primary business of bank-ing.5 Even where the business of banking has not been decided with certainty, and it may be the case that it is no longer important to have such a defi nition,6 it is clear that banks spearhead the provision of commercial lending. The banks, as deposit taking institutions and custodians of national savings, are uniquely placed for general lending and the unrestricted making of commercial loans has, as a rule of practice, remained a core function of the banks. Extending credit generally in the primary markets has thus largely been in the domain of the banks.
Tables 1.2 to 1.7 below, illustrate the dominant position of the banks as book run-ners and mandated lead arrangers in the practice of syndicated loans globally, in Europe, the Middle East, and Africa (EMEA) and the United States. The tables should be read in conjunction with Table 1.1 above, which showed that the banks are also the leading providers of funds.
4 The term multi-lender would also be suitable, but it lacks the inherent protections and privi-leges the law confers on banks. For these see United Dominion Trust Ltd v Kirkwood [1966] 1 All ER 968, 975 (CA).
5 State Savings Bank of Victoria Commissioners v Permewan, Wright & Co Ltd (1915) 19 CLR 457; United Dominion Trust Ltd v Kirkwood (n 4 above) 975.
6 The operative terminology for regulatory purposes is credit institution because Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions defi nes a credit institution as an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. In practical terms, banks are the most vis-ible credit institutions.
1.11
1.12
9Designation of Multi-Bank Financing
Tab
le 1
.2 T
op b
ook
runn
ers f
or g
loba
l syn
dica
ted
loan
s, 2
004
2006
2006
2005
Ran
kB
ookr
unne
r D
eal V
alue
($) (
m)
No.
%sh
are
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
%sh
are
1JP
Mor
gan
528,
777.
691,
051
13.2
11
JP M
orga
n49
1,74
8.75
1,03
714
.23
2C
itig
roup
377,
466.
2062
09.
432
Cit
igro
up41
7,93
4.36
723
12.0
93
Ban
c of
Am
eric
a35
7,33
3.73
1,14
98.
933
Ban
c of
Am
eric
a31
5,60
7.25
1,17
59.
134
RB
S14
4,22
4.96
263
3.6
4D
euts
che
Ban
k12
4,53
9.22
220
3.6
5D
euts
che
Ban
k13
3,51
3.17
219
3.34
5R
BS
116,
398.
4225
43.
376
BN
P Pa
riba
s12
5,78
5.13
397
3.14
6B
NP
Pari
bas
112,
106.
2941
33.
247
Bar
clay
s Cap
ital
124,
075.
2924
53.
17
Bar
clay
s Cap
ital
110,
112.
4626
23.
198
Wac
hovi
a11
5,23
2.84
430
2.88
8W
acho
via
99,8
60.5
643
32.
899
Cre
dit S
uiss
e97
,32
2.68
209
2.43
9A
BN
AM
RO
80,4
17.1
431
22.
3310
Cal
yon
72,2
19.4
021
81.
810
Cal
yon
77,4
78.8
823
22.
2411
Gol
dman
Sac
hs70
,459
.18
141
1.76
11M
izuh
o76
,668
.89
654
2.22
12M
izuh
o69
,062
.34
707
1.73
12SG
Cor
pora
te &
In
vest
men
t Ban
king
63,5
96.7
616
21.
84
13Su
mit
omo
Mit
sui
Ban
king
Cor
p68
,324
.34
648
1.71
13C
redi
t Sui
sse
62,5
43.2
517
51.
81
14A
BN
AM
RO
64,6
16.9
430
11.
6114
HSB
C59
,813
.55
207
1.73
15M
itsu
bish
i UFJ
Fi
nanc
ial G
roup
59,3
89.7
172
71.
4815
Sum
itom
o M
itsu
i Ban
king
C
orp
58,9
27.8
356
11.
7
16M
erri
ll Ly
nch
50,7
56.5
813
01.
2716
Gol
dman
Sac
hs54
,566
.64
100
1.58
17M
orga
n St
anle
y50
,469
.25
641.
2617
Mit
subi
shi U
FJ F
inan
cial
G
roup
47,8
94.7
855
61.
39
18SG
Cor
pora
te &
In
vest
men
t Ban
king
49,8
73.9
713
61.
2518
Lehm
an B
roth
ers
40,0
93.5
092
1.16
19D
resd
ner K
lein
wor
t46
,015
.10
911.
1519
Dre
sdne
r Kle
inw
ort
37,7
78.6
378
1.09
20H
SBC
44,1
15.9
014
21.
120
UB
S31
,892
.57
890.
92
Su
btot
al2,
649,
034.
386,
285
66.1
8
Subt
otal
2,47
9,97
9.76
5,98
271
.75
To
tal
4,00
2,83
4.32
9,42
710
0
Tota
l3,
456,
330.
038,
649
100
Multi-Bank Financing: What It is and is Not
10
Tab
le 1
.2 (
cont
.)
2004
Tota
l
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
% sh
are
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
N
o.%
shar
e
1JP
Mor
gan
483,
357.
621,
059
18.4
51
JP M
orga
n1,
503,
884.
063,
147
14.9
22
Cit
igro
up31
2,08
3.05
669
11.9
12
Cit
igro
up1,
107,
483.
612,
012
10.9
93
Ban
c of
Am
eric
a30
8,26
7.11
1,14
111
.77
3B
anc
of A
mer
ica
981,
208.
093,
465
9.73
4B
arcl
ays C
apit
al10
0,62
3.10
253
3.84
4D
euts
che
Ban
k35
8,33
0.03
675
3.56
5D
euts
che
Ban
k10
0,27
7.64
236
3.83
5B
arcl
ays C
apit
al33
4,81
0.85
760
3.32
6W
acho
via
85,5
61.7
541
03.
276
RB
S31
5,02
1.96
697
3.13
7B
NP
Pari
bas
77,0
01.6
933
62.
947
BN
P Pa
riba
s31
4,89
3.11
1,14
63.
128
AB
N A
MR
O54
,935
.24
257
2.1
8W
acho
via
300,
655.
151,
273
2.98
9R
BS
54,3
98.5
818
02.
089
Cre
dit S
uiss
e21
0,69
2.94
540
2.09
10C
redi
t Sui
sse
50,8
27.0
115
61.
9410
AB
N A
MR
O19
9,96
9.32
870
1.98
11H
SBC
41,7
55.5
318
41.
5911
Cal
yon
190,
024.
3459
71.
8912
Cal
yon
40,3
26.0
514
71.
5412
Miz
uho
167,
485.
921,
467
1.66
13Su
mit
omo
Mit
sui
Ban
king
Cor
p38
,505
.90
381
1.47
13Su
mit
omo
Mit
sui
Ban
king
Cor
p16
5,75
8.07
1,59
01.
64
14SG
Cor
pora
te &
In
vest
men
t Ban
king
35,2
68.4
912
81.
3514
Gol
dman
Sac
hs15
0,71
1.11
317
1.5
15M
itsu
bish
i UFJ
Fi
nanc
ial G
roup
32,6
98.2
130
01.
2515
SG C
orpo
rate
& In
vest
men
t B
anki
ng14
8,73
9.23
426
1.48
16Le
hman
Bro
ther
s25
,912
.61
800.
9916
HSB
C14
5,68
4.98
533
1.45
17G
oldm
an S
achs
25,6
85.3
076
0.98
17M
itsu
bish
i UFJ
Fin
anci
al
Gro
up13
9,98
2.70
1,58
31.
39
18C
omm
erzb
ank
Gro
up23
,233
.87
970.
8918
Dre
sdne
r Kle
inw
ort
102,
522.
7222
71.
0219
Mer
rill
Lync
h22
,443
.92
630.
8619
Lehm
an B
roth
ers
101,
082.
5027
01
20M
izuh
o21
,754
.69
106
0.83
20M
erri
ll Ly
nch
95,7
41.0
127
20.
95
Su
btot
al1,
934,
917.
364,
743
73.8
5
Subt
otal
7,03
4,68
1.70
16,9
8869
.79
To
tal
2,62
0,18
5.85
6,71
610
0
Tota
l10
,079
,350
.19
24,7
9210
0
Sour
ce: D
ealo
gic.
11
Designation of Multi-Bank Financing
Tab
le 1
.3 T
op b
ook
runn
ers f
or E
ME
A sy
ndic
ated
loan
s, 2
004
2006
2006
2005
Ran
kB
ookr
unne
r D
eal V
alue
($) (
m)
N
o.%
shar
eR
ank
Boo
krun
ner
Dea
l Val
ue ($
) (m
)
No.
%sh
are
1R
BS
101,
648.
3718
26.
841
Cit
igro
up12
3,39
4.51
205
8.65
2C
itig
roup
91,6
51.3
713
66.
162
RB
S98
,967
.66
185
6.94
3B
NP
Pari
bas
85,9
26.4
125
65.
783
BN
P Pa
riba
s89
,942
.38
283
6.31
4B
arcl
ays C
apit
al77
,959
.44
155
5.24
4B
arcl
ays C
apit
al77
,678
.08
175
5.45
5D
euts
che
Ban
k68
,977
.92
814.
645
Cal
yon
68,9
61.2
414
54.
836
Cal
yon
56,7
54.0
313
93.
826
JP M
orga
n66
,255
.71
854.
647
JP M
orga
n55
,736
.68
633.
757
Deu
tsch
e B
ank
66,2
45.9
395
4.64
8SG
Cor
pora
te &
In
vest
men
t Ban
king
46,0
41.6
311
33.
18
SG C
orpo
rate
&
Inve
stm
ent B
anki
ng59
,969
.98
136
4.2
9D
resd
ner K
lein
wor
t42
,794
.14
852.
889
AB
N A
MR
O51
,367
.70
933.
610
AB
N A
MR
O27
,416
.49
861.
8410
HSB
C48
,181
.43
122
3.38
11H
SBC
25,8
03.7
462
1.74
11D
resd
ner K
lein
wor
t37
,636
.96
772.
6412
Gol
dman
Sac
hs24
,527
.87
261.
6512
ING
21,8
10.1
797
1.53
13N
orde
a B
ank
AB
23,9
66.3
981
1.61
13N
orde
a B
ank
AB
21,6
83.2
473
1.52
14C
omm
erzb
ank
Gro
up22
,919
.61
871.
5414
Gol
dman
Sac
hs19
,791
.73
141.
3915
Mor
gan
Stan
ley
22,5
56.5
915
1.52
15C
omm
erzb
ank
Gro
up17
,657
.10
911.
2416
Ban
co S
anta
nder
Cen
tral
H
ispa
no S
A -
BSC
H19
,681
.22
331.
3216
Uni
Cre
dit G
roup
16,8
58.4
175
1.18
17C
redi
t Sui
sse
19,4
31.0
734
1.31
17M
orga
n St
anle
y16
,817
.13
121.
1818
ING
19,0
98.9
887
1.28
18U
BS
13,8
92.7
216
0.97
19U
niC
redi
t Gro
up16
,507
.43
791.
1119
Cre
dit S
uiss
e11
,708
.31
190.
8220
NAT
IXIS
16,5
01.6
177
1.11
20N
ATIX
IS11
,455
.93
590.
8
Su
btot
al86
5,90
0.98
1,27
358
.23
Su
btot
al94
0,27
6.30
1,29
965
.91
To
tal
1,48
7,11
4.84
2,15
710
0
Tota
l1,
426,
518.
652,
143
100
Multi-Bank Financing: What It is and is Not
12
Tab
le 1
.3 (
cont
.)
2004
Tota
l
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
%sh
are
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
%sh
are
1B
arcl
ays C
apit
al70
,708
.36
171
7.43
1C
itig
roup
284,
193.
2050
07.
352
Cit
igro
up69
,147
.32
159
7.27
2R
BS
248,
253.
0752
06.
423
BN
P Pa
riba
s59
,296
.29
232
6.23
3B
NP
Pari
bas
235,
165.
0877
16.
084
Deu
tsch
e B
ank
52,3
87.6
994
5.5
4B
arcl
ays C
apit
al22
6,34
5.88
501
5.86
5JP
Mor
gan
51,8
80.7
072
5.45
5D
euts
che
Ban
k18
7,61
1.55
270
4.85
6R
BS
47,6
37.0
415
35.
016
JP M
orga
n17
3,87
3.10
220
4.5
7C
alyo
n35
,403
.10
873.
727
Cal
yon
161,
118.
3637
14.
178
AB
N A
MR
O35
,262
.61
104
3.71
8SG
Cor
pora
te &
In
vest
men
t Ban
king
137,
809.
1734
73.
57
9H
SBC
32,6
89.3
911
03.
439
AB
N A
MR
O11
4,04
6.81
283
2.95
10SG
Cor
pora
te &
In
vest
men
t Ban
king
31,7
97.5
698
3.34
10H
SBC
106,
674.
5529
42.
76
11C
omm
erzb
ank
Gro
up20
,537
.45
782.
1611
Dre
sdne
r Kle
inw
ort
98,6
05.0
221
82.
5512
Dre
sdne
r Kle
inw
ort
18,1
73.9
156
1.91
12C
omm
erzb
ank
Gro
up61
,114
.16
256
1.58
13U
niC
redi
t Gro
up15
,559
.95
651.
6313
Nor
dea
Ban
k A
B58
,653
.33
200
1.52
14Ll
oyds
TSB
14,9
53.0
146
1.57
14G
oldm
an S
achs
54,9
76.4
357
1.42
15N
orde
a B
ank
AB
13,0
03.7
146
1.37
15IN
G53
,569
.34
242
1.39
16IN
G12
,660
.20
581.
3316
Uni
Cre
dit G
roup
48,9
25.7
921
91.
2717
Mer
rill
Lync
h10
,887
.75
31.
1417
Mor
gan
Stan
ley
42,9
67.5
034
1.11
18G
oldm
an S
achs
10,6
56.8
317
1.12
18Ll
oyds
TSB
39,4
24.9
112
71.
0219
Inte
sa S
anpa
olo
8,69
7.95
310.
9119
Cre
dit S
uiss
e38
,199
.31
730.
9920
Ban
c of
Am
eric
a7,
967.
4923
0.84
20N
ATIX
IS34
,835
.09
176
0.9
Su
btot
al61
9,30
8.31
1,08
865
.07
Su
btot
al2,
406,
361.
643,
668
62.2
5
To
tal
951,
739.
111,
752
100
Tota
l3,
865,
372.
596,
052
100
Sour
ce: D
ealo
gic.
13
Designation of Multi-Bank Financing
Tab
le 1
.4 T
op b
ook
runn
ers f
or U
S sy
ndic
ated
loan
s, 2
004
2006
2006
2005
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
%sh
are
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
%sh
are
1JP
Mor
gan
469,
219.
9697
124
.91
1JP
Mor
gan
419,
035.
7192
426
.68
2B
anc
of A
mer
ica
348,
456.
401,
119
18.5
2B
anc
of A
mer
ica
299,
065.
871,
113
19.0
43
Cit
igro
up25
6,97
2.87
383
13.6
43
Cit
igro
up26
2,48
8.00
395
16.7
14
Wac
hovi
a11
3,54
2.40
425
6.03
4W
acho
via
99,8
60.5
643
36.
365
Cre
dit S
uiss
e66
,714
.12
163
3.54
5D
euts
che
Ban
k56
,999
.72
117
3.63
6D
euts
che
Ban
k61
,945
.01
129
3.29
6C
redi
t Sui
sse
46,3
03.0
015
02.
957
Gol
dman
Sac
hs43
,936
.47
111
2.33
7G
oldm
an S
achs
32,1
66.7
483
2.05
8B
arcl
ays C
apit
al42
,347
.83
722.
258
Lehm
an B
roth
ers
31,0
71.4
582
1.98
9M
erri
ll Ly
nch
39,3
67.0
511
92.
099
Bar
clay
s Cap
ital
28,9
04.3
766
1.84
10R
BS
38,5
25.4
669
2.04
10W
ells
Far
go27
,622
.05
155
1.76
11PN
C B
ank
NA
32,4
50.9
017
61.
7211
AB
N A
MR
O20
,414
.61
165
1.3
12W
ells
Far
go32
,010
.03
209
1.7
12K
eyB
anc
Cap
ital
Mar
kets
19,7
05.2
413
81.
2513
UB
S28
,304
.00
841.
513
UB
S17
,911
.95
721.
1414
Lehm
an B
roth
ers
26,8
36.6
986
1.42
14G
E C
apit
al17
,279
.62
137
1.1
15B
NP
Pari
bas
26,1
91.4
764
1.39
15R
BS
16,4
80.3
766
1.05
16M
orga
n St
anle
y24
,477
.29
461.
316
SunT
rust
Ban
ks15
,270
.35
590.
9717
AB
N A
MR
O23
,369
.58
169
1.24
17B
NP
Pari
bas
15,0
74.3
963
0.96
18G
E C
apit
al23
,097
.74
192
1.23
18M
erri
ll Ly
nch
14,7
52.6
668
0.94
19K
eyB
anc
Cap
ital
Mar
kets
18,6
40.6
714
80.
9919
PNC
Ban
k N
A13
,052
.75
180
0.83
20B
ear S
tear
ns17
,088
.13
580.
9120
Mor
gan
Stan
ley
12,8
20.9
833
0.82
Su
btot
al1,
733,
494.
083,
618
92.0
1
Subt
otal
1,46
6,28
0.38
3,48
093
.36
To
tal
1,88
4,01
7.67
4,04
010
0
Tota
l1,
570,
499.
763,
793
100
Multi-Bank Financing: What It is and is Not
14
Tab
le 1
.4 (
cont
.)
2004
Tota
l
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
%sh
are
Ran
kB
ookr
unne
rD
eal V
alue
($) (
m)
No.
% sh
are
1JP
Mor
gan
423,
811.
9295
630
.92
1JP
Mor
gan
1,31
2,06
7.58
2,85
127
.19
2B
anc
of A
mer
ica
296,
707.
771,
080
21.6
42
Ban
c of
Am
eric
a94
4,23
0.05
3,31
219
.57
3C
itig
roup
213,
551.
6538
615
.58
3C
itig
roup
733,
012.
511,
164
15.1
94
Wac
hovi
a85
,351
.75
408
6.23
4W
acho
via
298,
754.
711,
266
6.19
5D
euts
che
Ban
k46
,167
.37
134
3.37
5D
euts
che
Ban
k16
5,11
2.09
380
3.42
6C
redi
t Sui
sse
42,9
98.7
013
53.
146
Cre
dit S
uiss
e15
6,01
5.82
448
3.23
7B
arcl
ays C
apit
al24
,122
.93
581.
767
Bar
clay
s Cap
ital
95,3
75.1
319
61.
988
Lehm
an B
roth
ers
22,0
12.9
071
1.61
8G
oldm
an S
achs
91,0
36.2
125
61.
899
Wel
ls F
argo
19,5
56.1
915
51.
439
Lehm
an B
roth
ers
79,9
21.0
523
91.
6610
Gol
dman
Sac
hs14
,933
.00
621.
0910
Wel
ls F
argo
79,1
88.2
651
91.
6411
UB
S13
,956
.21
711.
0211
Mer
rill
Lync
h65
,385
.12
245
1.36
12B
ank
of N
ew Y
ork
12,6
58.4
866
0.92
12R
BS
60,9
87.7
815
91.
2613
BN
P Pa
riba
s11
,799
.78
540.
8613
UB
S60
,172
.15
227
1.25
14PN
C B
ank
NA
11,2
76.5
415
30.
8214
PNC
Ban
k N
A56
,780
.19
509
1.18
15M
erri
ll Ly
nch
11,2
65.4
158
0.82
15A
BN
AM
RO
54,8
70.4
342
61.
1416
SunT
rust
Ban
ks11
,145
.61
710.
8116
BN
P Pa
riba
s53
,065
.64
181
1.1
17A
BN
AM
RO
11,0
86.2
592
0.81
17G
E C
apit
al50
,770
.61
424
1.05
18G
E C
apit
al10
,393
.24
950.
7618
Mor
gan
Stan
ley
46,1
64.4
211
10.
9619
Scot
ia C
apit
al9,
853.
6344
0.72
19K
eyB
anc
Cap
ital
Mar
kets
44,2
26.2
532
40.
9220
Mor
gan
Stan
ley
8,86
6.15
320.
6520
SunT
rust
Ban
ks43
,258
.81
198
0.9
Su
btot
al1,
301,
515.
483,
248
94.9
4
Subt
otal
4,49
0,39
4.82
10,3
2393
.06
To
tal
1,37
0,89
0.39
3,45
410
0
Tota
l4,
825,
407.
8211
,287
100
Sour
ce: D
ealo
gic.
15
Designation of Multi-Bank Financing
Tab
le 1
.5 T
op m
anda
ted
lead
arr
ange
rs fo
r glo
bal s
yndi
cate
d lo
ans,
200
420
06
2006
2005
Ran
kM
anda
ted
Arr
ange
rD
eal V
alue
($) (
m)
No.
%sh
are
Ran
kM
anda
ted
Arr
ange
rD
eal V
alue
($) (
m)
No.
%sh
are
1JP
Mor
gan
414,
670.
391,
378
10.3
61
JP M
orga
n34
2,49
2.56
1,37
99.
912
Cit
igro
up32
5,23
1.88
1,01
48.
132
Cit
igro
up32
5,96
1.65
1,09
89.
433
Ban
c of
Am
eric
a29
6,28
3.28
1,54
87.
43
Ban
c of
Am
eric
a27
0,00
0.72
1,62
57.
814
RB
S17
5,24
6.05
583
4.38
4D
euts
che
Ban
k14
4,65
7.79
432
4.19
5D
euts
che
Ban
k16
4,77
2.80
427
4.12
5R
BS
142,
652.
5655
84.
136
BN
P Pa
riba
s15
2,34
2.12
777
3.81
6B
NP
Pari
bas
139,
534.
9779
94.
047
Bar
clay
s Cap
ital
130,
918.
8443
63.
277
Bar
clay
s Cap
ital
134,
160.
1949
93.
888
Wac
hovi
a11
6,49
9.85
802
2.91
8A
BN
AM
RO
118,
108.
4166
93.
429
Mit
subi
shi U
FJ
Fina
ncia
l Gro
up10
4,39
3.86
1,11
52.
619
Wac
hovi
a10
0,32
5.92
833
2.9
10C
redi
t Sui
sse
103,
040.
9429
72.
5710
HSB
C98
,895
.76
518
2.86
11A
BN
AM
RO
95,0
93.0
966
82.
3811
Cal
yon
97,9
95.0
549
12.
8412
Miz
uho
94,6
80.1
995
82.
3712
Miz
uho
83,5
88.1
079
92.
4213
Cal
yon
93,1
89.7
749
72.
3313
Cre
dit S
uiss
e78
,574
.55
266
2.27
14Su
mit
omo
Mit
sui
Ban
king
Cor
p87
,278
.99
864
2.18
14SG
Cor
pora
te &
In
vest
men
t Ban
king
78,1
78.6
137
42.
26
15G
oldm
an S
achs
79,4
09.9
419
91.
9815
Mit
subi
shi U
FJ F
inan
cial
Gro
up75
,396
.03
812
2.18
16H
SBC
79,3
72.4
041
31.
9816
Sum
itom
o M
itsu
i Ban
king
Cor
p67
,972
.19
694
1.97
17SG
Cor
pora
te &
In
vest
men
t Ban
king
67,0
85.9
932
51.
6817
Gol
dman
Sac
hs51
,138
.53
130
1.48
18M
orga
n St
anle
y52
,902
.93
119
1.32
18IN
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