Syndication refers to joint financing by multiple banks for a single borrower. The key objectives of syndicate financing include spreading credit risk, analyzing project viability from different angles, enhancing returns through fees, and promoting large industries. The syndication process involves a lead bank evaluating a project proposal, preparing common terms, obtaining lender commitments, and closing the deal. Agrani Bank has experience as both a lead arranger and participating bank across sectors like textiles, garments, steel, and power. As a lead arranger, it has financed 13 large projects and participated in 63 other projects.
Need capital to start, grow and manage your business, we provide loans in the form of short term loans and long term loans, check your ability to get a loan by bank loan rating and credit score check. Get complete information about the Syndication & Funding right from Term Loans to Unsecured Loans and the Process.
Need capital to start, grow and manage your business, we provide loans in the form of short term loans and long term loans, check your ability to get a loan by bank loan rating and credit score check. Get complete information about the Syndication & Funding right from Term Loans to Unsecured Loans and the Process.
Modes of Financing
Purpose of Term Loans
Types and Features of Term Loans
Procedures Associated with Term Loans
Pros and Cons of Term Loans
Appraisal of Project
Repayment Schedule
Syndicated Loans
Debt instruments provide fixed and higher returns. We have listed types of Debt Instruments that includes fixed income securities promising the investors that they will receive cash.
Modes of Financing
Purpose of Term Loans
Types and Features of Term Loans
Procedures Associated with Term Loans
Pros and Cons of Term Loans
Appraisal of Project
Repayment Schedule
Syndicated Loans
Debt instruments provide fixed and higher returns. We have listed types of Debt Instruments that includes fixed income securities promising the investors that they will receive cash.
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A credit derivative is a financial contract in which the underlying is a credit asset (debt or fixed-income instrument). The purpose of a credit derivative is to transfer credit risk (and all or part of the income stream in relation to the borrower) without transferring the asset itself.
A credit derivative serves as a sort of insurance policy allowing an originator or buyer to transfer the risk on a credit asset (of which he may or may not be the owner) to the seller(s) of the protection or counterparties.
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The DT can directly enforce the security without obtaining any consent from the debenture holders.
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2. As per Encyclopedia of Banking and Finance (EBF), “Syndication” means a temporary association of parties for financing and
execution of somespecific businesspurpose.
Syndicate Financing means joint financing by more than one bank to the same borrower against a common terms and conditions
governed by acommon document (or set of documents).
IntroductIonIntroductIon
Syndicate FinancingSyndicate Financing
Objectives
•To spread and sharethecredit risk among all theparticipating banks.
•To company central bank’s instruction where it was been emphasized on loan syndication by more than one banks in cage of
largeloan.
•Analyzing theproject viability from variousanglesby thesyndicatemembers.
•Enhancethereturn on assetsby arranging thedeal and taking adisproportionateamount of thefeesfrom thetransaction.
•To createleadership in thesyndicated credit market by theLead Arranger.
•For reduction thelending risk Syndication Finance
•To promoteentrepreneur to establish largeindustry
Types of syndication Market
•Term loan
•Revolving Credit Facility
•Letter of Credit
•Commercial Letter of Guarantee
•Standby Credit
Types of syndicated
Facility
• Lead Arranger (LA) • Joint Arranger
• Co-Arranger • Arranger
• Participant • Borrower
• Agent/Facility agent/Security agent
Parties involved in Syndication Finance
Common Terminology in Syndication Market
Due diligence Syndication Book Soft Commitment Best effort Basis Roadshow Tombstone
Primary Market Secondary Market
Domestic Market International Market
3. Syndication Process
The Borrower proposed the Lead Bank with the Project Proposal (PP)The Borrower proposed the Lead Bank with the Project Proposal (PP)
The Lead Bank EvaluatesThe Lead Bank Evaluates
The Lead Bank Prepares the Common Term Sheet (CTS)The Lead Bank Prepares the Common Term Sheet (CTS)
Send the CTS to the Borrower for EvaluationSend the CTS to the Borrower for Evaluation
Negotiation between the Lead bank and the borrower on the terms of the CTSNegotiation between the Lead bank and the borrower on the terms of the CTS
Finally agree on the termsFinally agree on the terms
Letter of Authority/Mandate Letter is issued by the Borrower to the Lead BankLetter of Authority/Mandate Letter is issued by the Borrower to the Lead Bank
Preparation of the Information MemorandumPreparation of the Information Memorandum
Circulation of the Information Memorandum amongst the prospective lendersCirculation of the Information Memorandum amongst the prospective lenders
The interested lenders then issued Letter of Commitment/ Confirmation Letter to the Lead BankThe interested lenders then issued Letter of Commitment/ Confirmation Letter to the Lead Bank
Signing of Agreement and other documentsSigning of Agreement and other documents
Closing The Syndication Deal primarily & starting the syndication in Real SenseClosing The Syndication Deal primarily & starting the syndication in Real Sense
4.
5. Status of fund raising of the syndication dealStatus of fund raising of the syndication deal
Equal SubscriptionEqual Subscription Over SubscriptionOver Subscription Under SubscriptionUnder Subscription
NAMEOFSOMESYNDICATERLOAN DOCUMENTS
• Facility Agreement; • Pari Passu Security Sharing Agreement;
• Escrow Account Agreement; • Agreement for Assignment of Insurance;
• Agreement for Assignment of Contract; • ProjectsFundsand ShareRetention Agreement;
• Subordination Agreement; • Deed of Mortgage;
• Letter of Hypothecation (machinery to bepurchased); • Letter of Hypothecation ( existing machinery);
• Letter of Hypothecation ( Balanceon theaccount of Escrow Account); • Power of Attorney to sell thehypothecated machinery;
• Letter of Undertaking of all theShareholders; • Personal Guaranteeof thesister concerns;
• Letter of Continuation; • Demand Promissory Note;
• Letter of comfort;
Syndication Loan Data (Graphical Representation in Graph 1 &2)
Period covering after execution/ signing of syndication loan and security documentstill full and final adjustment of syndicated loan
facility
Post Signing Stage
After 1980'sAgrani Bank Limited hasstarted consortium financing and funding afew successful projectschronologically it termsin to
syndication financing and our Bank hasstarted syndication financing from last 10 years. Aslead Arranger and participating member bank
Agrani Bank Limited hasfinanced in thefollowing sectors:
Syndicate Financing In Agrani Bank Limited
Textile Garments Steel & Re-rolling Hospital Education Sector Chemical Power
AsLead Arranger our Bank hasfinanced 13 (Thirteen) nos. of largeprojects& asparticipating member bank hasfinanced 63 (Sixty
Three) nos. of successful projects.
Year No. Project Syndication Loan Amount
in Cr TK
Recovery
Amount in Cr
TK
Recovery (%) Industrial Loan
Amount in Cr TK
% (Upward Trend)
2014 76 2144.35 1004.39 83.08 7528.79 28.48
2013 75 2041.93 831.79 81.21 7427.08 27.49
2012 71 1958.49 697.33 62.79 7379.76 26.54
2011 70 1654.49 420.36 73.86 6080.59 27.21
6. Year Total Fee &
Comm. in Cr TK
Syndication Fees
& Comm. in Cr TK
Percentage
(%)
2014 433.86 3.58 0.83
2013 514.23 3.61 0.70
2012 414.34 2.12 0.51
2011 422.36 6.88 1.63
Contribution of ICD-1 in Fee &Commission
(Graphical Representation in Graph 3)
Bank Name No of Project
Syndicate Finance
Sanction Amount in Cr TK
Rupali 13 600.00
Sonali 34 1096.22
Janata 62 1537.90
Agrani 76 2144.35
Comparison of Syndicate Financing of SOCBS
(Graphical Representation in Graph 4)
Agrani Bank Ltd has financed in 10 Power Plant Projects through
Syndicate Financing which produce 748 MW out of 11532 MW Power of
National Grid and contributing to minimizetheload shedding. So it reflects
therealization of vision of ABL that iscommitted to servethenation.
Graph 1
Graph 3
Graph 4