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KIC000098 - Bank Loans Brink lam lo corporate hon-em Ire...

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Unformatted text preview: Bank Loans Brink lam lo corporate hon-em Ire divided into two categories; immanent-grade loans Ind leveraged loans. An Invennmnl—grad'e loan is | bank loan made in eon-pom: borrowers drethlve en immanent-grade min; A leveraged loan is I bank loan to a earner-Lion that has .I belw-invement—gnde ruling. A syndicated bank 1mm is one in which a group (or syndiuze) of banks provides finds In the borrower: A ryndieeied benkloen is used by borrowers who seekro reiee a large mmmoffundsinthelommm The» bunk loom Ire filled :2an bank loan: beau: oftheir priorily position Msubnrdimud lendm (bondholders) Wllh impact In reply-wit ufinumsr and principal. Sin-auras in which no repay-near of rho pri neipel is nude unril [he mummy due no he emngnd end no ulled bullellnans. mow : ,ir‘lh‘a ‘ m. rm m BIr-n'ei‘LA-wvm—p Bank Loans (continued) b Syndicated lolns are distributed by we methods: amignnmrl or participation, '1’ Each method has is relative edvmmges and disldvenhges, wirh the method ofnssigument being the more desinhle of the two. I The holder of: loan who is inierened in selling 1 portion can do so by passing the interest in the kiln by file merhadof assignment. a In this procedure. the seller Ire-refers ell rim empleuiy to the holder oflhe mignmenl, now called the antigen, 0 The mignee is said to hevepnvuy afoommcr wilh lhe borrower. \’ A maturation involves a holder of a loan “participating our“ I portion of the holding in rim particula- loan. ta:- rw e mum: . "uh-m, 1. Pubhhl'l‘.~nr‘1l'£' Bank Loans (continued) > Secondary Marker for Syndicated Bank Loens -/ While al one lime, a bank or bunks who originated loans retained Ihem in their loan portfolio. today those loans can be traded in the secondary marker or securitized to create collateralized loan obligations and require periodic markingto marker. > Higthield Bond versus Leveraged Loans 1 Leveraged loans ere bank Ion-is in which the borrower is a non-inveslmenl-gmde borrower. / Hence, leverage loans and high-yield bonds are allemalive sources of debl by noninvesh'nem— guide borrowers, uvflnnn.mJlIo-ieaw:-u:4 a,“ “inflammmrmr ...
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