Course Work on Credit Market: Syndicated Loans Market

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IntroductionSyndicated loans involve the lending of substantial sums, the underwriting and management of which are handled by more than one financial institution. The lenders often come from different regions of the world and are rarely located in the country of the borrower. Syndicated loans have been one of the most significant instruments of international finance to emerge since World War II. Their popularity increased until 1982, had a setback for the next four years (until 1986), and improved considerably by 1988 but has been stagnant since. The syndicated loan affords borrowers access to large amounts of money that single lenders cannot or will not supply. Common uses of syndicated loans have been to cover balance-of-payments deficits and to finance the ...

... be accommodated by a single bank. In addition to creating a "pool" funds available for lending, it provides diversification of bank's credit portfolio, as banks can participate in many syndicate loans. In addition, banks' risk level decreases as each bank only provides a portion of the loan. Due to the fact that many banks participate in the loan, a specific structure has been developed to provide transparency, liability as well responsibility sharing. The syndicate loan market is an important part of the international banking industry as syndicate loans are primarily loans provided by banks foreign to the borrower. This particular market is growing at a very rapid pace, with US leading the way. Such rapid growth over

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