Hotline : 

Current Position : Home > BOC MACAU > Corporate Banking > Corporate Loans
Online Banking

SYNDICATED LOAN

Description

Syndicated Loan is a loan made by two or more lenders and administered by a common agent using similar terms and conditions and common documentation.

Features

1.Loan of large amount with long tenor to satisfy medium to long-term financing needs of borrower with loan proceeds applicable in transportation, petrochemical, telecommunications, electricity, hotel and real estate, large equipment leasing and leveraged buy-outs, etc.

2.Borrower is not required to deal with different banks; management of loan becomes more efficient. After negotiation of terms and conditions with borrower, the arranger is responsible for syndicate formation. Borrower is only required to deal with the facility agent in favour of all lenders in respect of drawdown and repayment.

3.High flexibility in structure and currency. Borrower can choose term loan, revolving loan and standby letter of credit in any currency.

4.Beneficial for the borrower to establish a good market place. Successful conclusion of a syndicated loan means full recognition of the borrower’s financial and operational situation. The borrower can take this opportunity to enhance its business reputation.

5.Comparison of syndicated loan and bilateral loan

Item Syndicated Loan Bilateral Loan
Relationship with Lenders Formation of syndicate lenders administered by arranger and facility agent  Relationship between the borrower and the lender is one to one
Loan Assessment Each lender of the syndicated loan makes decision based on the information memorandum supplied by the lead-arranger. The lender makes independent assessment from its own information gathered.
Loan Agreement Uniform agreement for all lenders   Borrower is required to sign different loan agreements with different banks. Relationship is one to one.
Terms and conditions Uniform terms and conditions agreed by all lenders of the syndicate Borrower may negotiate different terms and conditions with different banks
Loan Drawdown Through facility agent Different drawdowns with different bank
General Administration Facility agent Each bank administers its own loan
Loan Repayment Repayment administered by the  facility agent for distribution to syndicate lenders   Repayment according to terms and conditions agreed by each bank.

Loan Currency

Loan currency principally in HKD, MOP or USD but can be in AUD, JPY, EUR and GBP. Borrower can also choose a basket of currencies at its own combination.

Interest Rate

Interest rate varies depending on each borrower’s financial status and implemented pursuant to the terms of loan agreement.

Fees

Fees including but not limited to arranger fee, underwriting fee, facility agent fee and commitment fee, etc.

Target Customers

1.Borrowers with long-term and large capital requirement

2.Borrowers enjoy good reputation in their own industries. They have strong business capabilities and possess financial strength to run the business fully recognised by majority of lenders. 

Eligibility Criteria

1.Borrowers should meet the basic conditions and requirements of the bank policy

2.Sound financial and operational position or the prospect of the project company is promising with competitive edge

3.Borrowers have established good relationship with BOC group.

4.Mandate to arranger bank to form syndication and administer information for assessment by other lenders.

Information Required

1.Information of the borrower, shareholders and guarantors.

2.Certificate of incorporation, memorandum and articles of association.

3.Project approval by the government, feasibility study and construction budget and other approval documents including those issued by Chamber of Commerce, Taxation Bureau, Environmental Department, Customs and Concise Department, etc.

4.Purchase contracts, construction contracts and sales contract in relation to the project.

5.Any other documents deem necessary by the bank.

Application Procedures

1.Loan application

2.Loan structure and term sheet drafting after negotiation with the borrower

3.Mandate to BOC to lead-arrange syndicated loan

4.Finalisation of loan amount

5.Preparation of syndication schedule, strategy and invitation list

6.Delivery of information memorandum with invitation letters to potential lenders

7.Commitment by participating banks

8.Finalisation of facility allotment to lenders

9.Drafting of loan agreement for review by all lenders

10.Loan signing

11.Adminstration by facility agent

NOTES

Syndicated loan is principally formed by a group of lenders including lead-arrangers, arrangers, managers, participants, facility agent and coordinating arrangers. Each lender disburses funds to fulfil its commitment bearing both rights and risks. Syndicate lenders principally by order are : 1) Lead-arrangers, 2) Managers and 3) Participants.

1.Arranger(s) means one lender or a group of lenders mandated by the borrower to underwrite the loan and responsible for sell-down. It/they organise and administer formation of syndication.

2.Arranger(s) contributes the most in terms of commitment amount in the syndicated loan and rank the highest in the syndication. They are generally referred to as Lead-arrangers.

3.Managers are lower in ranking than lead-arrangers in terms of commitment amount but they still have more power in terms negotiation.

4.Participating banks are invited by arrangers to participate with small commitment amount. They are not responsible for any administrative work of the syndication and do not bear any responsibility of underwriting.

5.Facility agent mandated by the borrower and agreed by all lenders to administer the loan throughout the loan life in respect of drawdown and repayment. Onward delivery of information and/or communication from the borrower to all lenders and handle related matters in case of default.

6.Coordinating arrangers may take up some administrative tasks in the syndication.

Related Service