2/8/2024 0 Comments Leveraged loans arrangementIn Blackstone’s 5.4 billion LBO of Gates Global, the senior part of the capital structure included a 7-year 2. Prior to the adoption of ASC 842, a lease was considered a leveraged lease if the terms of the arrangement met specified criteria.It had to qualify as a direct financing lease under ASC 840-10-25-43(b) and meet the criteria specific for leveraged leases in ASC 840-10-25-43(c) (see LG 7.2.1). Under standard LMA documentation, sponsors are generally permitted to buy back their own debt, and many in the market do not see this as a problem. Leveraged term loan with revolver example. According to the Bank of England, including less -liquid loans that are not tracked in those indices, non-bank investors hold about 1.8tn of leveraged loans, and the total size of the market is 2.2tn if one includes lending facilities held by banks. ![]() So why does it matter? The answer to this depends on whether the sponsor or the borrower is doing the buying. Syndicated Loan: A syndicated loan, also known as a syndicated bank facility, is a loan offered by a group of lenders referred to as a syndicate that work together to provide funds for a. "We will have to look at standard documentation in light of what the market is doing," says Mike Johnstone, associate director at the LMA in Canary Wharf. Guarantees, syndicated loans, shares in collective investment vehicles, direct investment in companies, credit lines, simple co-financing arrangements and. Indeed, the trades have prompted the Loan Market Association itself to examine whether steps should be taken to address the practice. Several instances of this in recent months, such as Danish phone operator TDC’s purchase of €200 million of its own debt in March and private equity group PAI’s purchase of second-lien debt used to finance its own LBO of Lafarge, have highlighted what could become a growing point of contention in the loan market. But some recent purchases have been raising hackles among syndicate banks because of the nature of the buyer: the borrower or sponsor itself. In a market as dysfunctional as the loan market still is, banks should be welcoming any new buyers with open arms.
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