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Introduction

Syndicated loan is a form of loan business in which two or more lenders jointly provide loans for
one or more borrowers on the same loan terms and with different duties and sign the same loan
agreement. Usually, one bank is appointed as the agency bank to manage the loan business on
behalf of the syndicate members.
Features
1. Large amount and long term. It can meet borrowers' demand for funds of long term and large
amount. It is generally used for new projects loans, large equipment leasing and enterprises'
M&A financing in transportation, petrochemical, telecommunication, power and other industries.
2. Less time and effort for financing. It is usually the responsibility of the arranger for doing the
preparation work of establishing the syndicate after the borrower and the arranger have agreed on
loan terms by negotiation. During implementation of the loans, the borrower does not need to
face all members of the syndicate, and relevant withdrawal, repayment of principal with interest
and other management work related to the loans shall be fulfilled by the agency bank.
3. Diversified approaches to syndicated loans. The same loan syndications can include many
forms of loans, such as fixed-term loans, revolving loans, standby L/C line on requirements of
the borrower. Meanwhile, the borrower can also choose RMB, USD, EUR, GBP and other
currency or currency portfolio, if needed.
4. It can help borrowers establish a good market image. Successful establishment of the
syndicate comes from the participants' full recognition of the borrower's financial and
operational performance, by which the borrower can build up their reputation.
5. Differences between syndicated loan and joint loan
Item Syndicated Loan Joint Loan
Inter-bank
Relationship
All members join together to
contact with borrowers through
lead and agency banks.
All banks, independent
from each other, contact
with borrowers
separately
Approval of
Loans
All banks make loan decision
on the basis of the information
memorandum provided by the
lead bank
All banks collect
information separately
and go through many
rounds of examination.
Loan Contract Unified contract
Each bank signs contract
with the borrower by
itself.
Loan Terms
(interest rate,
Unified conditions
Each bank negotiates
with the borrower
term, guarantee
type)
separately with different
terms of loans.
Loan
Dispersement
Funds are collectively
transferred in agreed
proportions via the agency
bank.
Loans are dispersed
separately with
derivative deposits
retained at each bank.
Loans
Management
In the charge of the agency
bank
Management of its own
share of loans by each
bank
Recovery of
Loan Principal
and Interest
The agency bank is responsible
for the collection of principal
and interest according to the
contract and transfer of relevant
amounts to designated account
of each bank in lending
proportions
Each bank collects
principal and interest
according to repayment
of principal with interest
plan separately agreed
with its borrowers
Currency
Syndicated loan mainly adopt RMB. Besides it, USD, EUR, GBP and other currencies are also
available. Multiple currencies can be used in a single syndicated loan on demand of the
borrower.
Term
Three to five years for short-term, seven to ten years for medium-term and 10-20 years for long-
term.
Interest Rate
The price of syndicated loan is composed of loan interest and fees.
Lending interest rate shall be set, according to different borrowers, in line with lending interest
rate policies of the People's Bank of China, lending interest rate regulations of Bank of China
and provisions of the syndicated loan contracts.
Charges
Charges mainly include arrangement fee, underwriting fee, agency fee, commitment fee.
Target Customers
1. Borrowers who require long-term and large-amount loan.
2. Borrowers with high reputation in the industry, whose operation ability as well as financial
and technical strength are recognized by most banks.
Application Qualifications
1. The borrower should be the legal persons of enterprises and public institutions as well as other
economic organizations approved and registered in People's Republic of China.
2. The borrower must be qualified for basic terms and conditions on the borrowers of Lending
General Provisions as well as crediting management policy issued by the Bank of China.
3. The borrower shall meet requirements of certain level after credit rating by the Bank of China
or other recognized rating agency;
4. The borrower shall be large and medium manufacturing enterprises or project companies with
sound operation and finance as well as strong competition in respective industries, which shall be
promising in the development.
5. The borrower has established a regular and sound partnership with Bank of China Group.
6. In the event of joining the syndicate set up by other banks, the arranger bank shall be a policy
bank, state-owned holding bank or foreign bank with sufficient credit and operational strength.
Required Documents
1. Relevant information on the borrower and their Chinese and foreign shareholders and
guarantors;
2. Business license and articles of association of the borrower as well as joint venture or
cooperation contracts of foreign-funded enterprises and inland associated enterprises;
3. Project proposals, feasibility study reports, engineering estimates and other documents
approved by government departments and approval documents, as well as he approval
documents on the project provided by administrations of taxation, environmental protection, and
customs;
4. Purchase contracts, construction contracts, supply and sale contracts of project equipment.
5. Other documents or information needed by the bank.
Process

1. The sales account manager of Bank of China pays attention to the financing demands of
customers;
2. Receive loan information/financing tender documents of customers;
3. Negotiate with customers to draft of the list of loan terms and financing structure;
4. Bank of China is officially appointed by the lead bank and the principal underwriting
bank of syndicated loans;
5. Confirmation of the loan amount by Bank of China;
6. Determination of preparation schedule, organizing strategy and invitation list of syndicates;
7. Prepare loan information memorandum and letter of syndicate invitation, and send out
the invitation to relevant financial institutions;
8. Subscription amount undertaken by participants;
9. Confirmation of the final loan limit of each loan syndication participant;
10. Parties agree to sign the loan agreement and guarantee agreement.
11. Sign agreements;
12. Work of the agency bank.
Kind Reminder
Business of syndicated loan mainly involves arranger, lead bank, manager, participant, agency
bank, coordinator and other members, who will perform the duty, enjoy the right and assume the
risk according to the contract or their respective lending proportion. Syndicate member banks are
divided into three main levels: first, arranger (lead bank); second, manager; third, participants.
1. The arranger, responsible for organization and arrangement of the syndicated loan, is a bank or
banks which undertake preparation of syndicate and distribution on commission of customers.
The arranger usually will underwrite the whole issue of syndicated loan.
2. The lead bank underwrites a larger share of the syndicated loan, ranking the highest among
managers. Usually, the lead bank is also the arranger.
3. The manager refers to the position granted by the lead bank according to loan amount and
level undertaken by each bank in the syndicated loan with larger amount and more
participants. It's a bank responsible for establishing syndicate during the preparation stage. The
managers, forming manager board of the syndicate, are mainly responsible for organizing the
examination of loan projects and feasibility of syndicate establishment, discussing loan
documents with the lead bank and finally signing the loan contract.
4. Participants refer to the banks who accept invitation of the arranger to join the loan syndicate
and provide loans according to shares determined through negotiation. Differences with the
managers: Less loan subscription, assume no responsibility for undertaking and other practical
preparation of the syndicate.
5. The agency bank is selected by syndicate members and approved by the borrower during the
loan period. After signing the loan agreement, the agency bank, on behalf of syndicate members,
is responsible for withdrawal, repayment of principal with interest, post-loan management and
other issues on loan management as well as communication between syndicate members and the
borrower, handling contract breach, etc. in the light of terms of the loan agreement.
6. The coordinator refers to the bank, selected from lead banks, to supervise the whole
syndicated loan and to partially undertaken preparation tasks of the bank syndicate.
7. Consultant refers to the bank appointed by the borrower during the syndicated loan period,
which provides paid financial advisory service for the borrower to make correct loan decision in
face of various quotations and loan terms provided by other banks so as to facilitate all the loan
work.
Case
In 2007, in order to acquire Alcal, Rio Tinto Group raised USD 40 billion worth of syndicated
loan across the world, Bank of China was the only bank in Asia (except Bank of Japan) that
joined the loan syndication as a co-arranger (Lead Arranger) and underwriter. It was the largest
syndicated loan project in London market (the fourth largest in the world).
In 2008, Bank of China acted as a arranger, mandated arranger and agency bank during the
buyer's USD 592 million worth of syndicated loan for Indonesia Indramayu power plant export
project, in which 18 internationally active banks have participated, and the subscribed amount
was surpassed by 4.5 times.
In 2008, Bank of China, as the exclusive mandated arranger, successfully prepared the
syndicated loan project with USD 600 million for Australia's largest telecom operator, Telstra
Corporation, and achieved oversubscription.

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