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Amortising Schedule
Where the principal is repaid in even instalments over the term of the loan.
Availability (commitment) period
A set period during which a borrower may draw down a loan.
Balloon Repayment
Where the principal is repaid in instalments, with the final being the biggest.
Bilateral loan
A loan facility entered into by a single lender and borrower, usually used for small term loans and usually held by that lender until maturity.
Bonds
Financial instruments where a borrower (called an issuer) promises to repay investors (the bondholders) by a specified date, usually with interest.
Bookrunner
The bookrunner controls the syndication process for best-efforts and underwritten loans. They are likely to agree a list of proposed lenders with the borrower before sending initial invitations and then sell the loan to potential members of the syndicate by contacting lenders likely to be interested in participating in the loan. They also advide the borrower in market conditions to ensure the borrowers loan is attractive to secure a syndicate of lenders.
Bullet Repayment
Where the principal is repaid in a single instalment upon maturity.
Clearing House Automated Payment System (CHAPS)
The UK’s interbank system for large sterling payments. CHAPS uses the Bank of England’s real-time gross settlement (RTGS) system to allow the transfer of funds to be done in real time for each individual CHAPS payment throughout the CHAPS operational day.
Clearing House Interbank Payment System (CHIPS)
Funds-transfer system that is privately owned by the financial institutions that use it. It clears and settles USD denominated cross-border and domestic payments, combining two types of payment systems: a netting system and an RTGS.
Co-ordinator
For self-arranged club loans, the co-ordinator facilitates the smooth execution of the transaction, liaising with lenders’ counsel and all syndicate banks to ensure fluid communication and consensus on documentation.
Commitment fee
A fee charged by a lender to a borrower for an unused credit line or an unutilised loan.
Committed facility
Once the facility agreement has been executed, the lender is obliged to advance money when requested by the borrower (subject to the borrower complying with certain pre-agreed conditions)
Credit/Debit Funds
Debt mutual funds which invest on securities/bonds with lower credit ratings. Generally riskier but with higher chance of returns and tax free dividends.
Debt Advisors
Provide solutions for debt problems and various services related to financial planning.
Documentation Bank
This is the bank or banks that are responsible for managing the documentation process. They are also often the facility agent. The documentation bank appoints lawyers for the lenders, acts as principal negotiator of loan documents with the borrower, often alongside the mandated lead arranger, negotiates comments on the documents from the proposed syndicate lenders and organise the signing of the documents and any powers of attorney needed.
Euroclear/Clearstream
Financial companies that specialise in the settlement of securities transaction.
Facility Agent
The facility agent represents the lenders during the life of the loan, managing the information and cash flows between the lenders and the borrower. The Facility Agent acts as an agent for the lenders but is paid for by the borrower.
Front running
Front running is when an underwriter or arranger of a loan facility actively encourages a bank (or other investor), which is considering taking a primary participation in the syndication, to wait for the secondary market.
Hedging Agreement
The hedging agreement is a form of derivative used to offset financial risk.
Information Memorandum
The information memorandum contains legal, financial and commercial information on the borrower’s business and the proposed loan facility. It is circulated to potential syndicate investors to assist in their decision of whether or not to join the syndicate.
Intercreditor Agreement
Seeks to regulate the respective rights and ranking of creditors providing finance to the same borrower. It is made between the parties involved in a loan transaction, including (amongst others) the obligors, the senior lenders, any mezzanine lenders and any other subordinated creditors.
Investment Grade Loan
Typically includes loans made to government and loans made to blue chip companies, i.e. those entities with high credit ratings (Baa3/BBB- or higher).
Large Firm
A company having more than £36 million in turnover, £18 million balance sheet total or 250 employees in any one financial year.
Lenders
Lenders are banks or institutional investors who ultimately lend the money to the borrower.
Leveraged Loan
If a borrower’s credit rating is below a specific credit rating (i.e. Ba1/BB+), the loan will be deemed to be leveraged.
LIBOR
LIBOR (London Inter Bank Offered Rate) is an interest rate calculated from estimates submitted by the leading banks in London. Each bank would estimate what they would charge were they to borrow from other banks. It has been discontinued but was the primary benchmark worldwide for short term loans.
Loan Agreement
The loan agreement is the principal finance document and sets out detailed terms and conditions on which the facilities are to be made available to the borrower. The content falls broadly into four categories: key mechanics, key margin protection, key commercial protection and boilerplate provisions.
Mandate Letter
The mandate letter is the document whereby the borrower appoints the arrangers and sets out the terms on which the arrangers will arrange the borrower’s facility. It also may be known as a commitment letter.
Mandated Lead Arranger
The mandated lead arranger leads negotiations with the borrower in all types of syndicated loans.
Nostro Account
A nostro account is a bank account held in another country by a domestic bank, denominated in the currency of the overseas country.
Obligor
A person who owes or undertakes an obligation to another by contract or other legal procedure.
RCF
An RCF provides a borrower with a maximum aggregate amount of capital, available over a specified amount of time (usually the entire life of the loan).
Secondary Loan Market
Refers to the sale and distribution of syndicated loans by lenders in the original syndicate or by subsequent purchasers of the loan.
Security Agent
If a syndicated loan is provided on a secured basis, a lender from the syndicate will usually be appointed as a security agent. The security agent will hold the security on trust for the benefit of all the lenders and any other parties entitled to benefit from the security. Can also known as a security trustee.
Sponsor
Corporate entities that provide support within the financial services industry. They could also be considered the lead arranger/underwriter in a funding round deal.
SWIFT codes
Swift Code is a code that helps overseas banks identify which bank to send money to.
Swingline Facility
A swingline facility is a very short-term loan (generally no longer than 5 business days), typically provided by a subset of RCF lenders which permits amounts to be borrowed, often on the same-day that a utilisation request is made.
Tenor
Tenor refers to the length of time remaining until the loan is due to be repaid.
Term Loan
A committed facility, which may or may not be secured, the provides a specific amount of money with a specified repayment schedule. It is typically used when a company requires long-term financing for a specific project/purchase.
Term Sheet
The term sheet summarises the commercial terms of the proposed financing, i.e. the terms on which the lenders are willing to lend to a borrower, and is used as a basis for further negociations and the first draft of the loan agreement.
Termed-out
There is usually an option that allows the borrower to convert utilisations under the RCF into a term loan. After such an option has been exercised the relevant RCF is referred to as having been termed-out. This is usually subject to giving the lender a specified period of notice and paying a fee. Typically the repayment date for the term loan will be after the expiry date of the original RCF, effectively reclassifying the short-term debt to a longer-term debt.
Trans-European Automated Real-time Gross Settlement Express Transfer System (TARGET2)
The RTGS system for the Eurozone and the settlement system for cross-border payments in euros. Its use is mandatory for the settlement of any operations involving the Eurosystem.
Underwriter
The arranging bank group, usually a relationship bank that commits to the entire (or a portion of the) loan amount, and takes market risk of disruption.
Vintage Fund
Vintage year in the private equity and venture capital industries refer to the year in which a fund began making investments or, more specifically, the date in which capital was deployed to a particular company or project.
White List
A list of companies that could come into the deal.
- All
- A
- B
- C
- D
- E
- F
- H
- I
- L
- M
- N
- O
- R
- S
- T
- U
- V
- W
Amortising Schedule
Where the principal is repaid in even instalments over the term of the loan.
Availability (commitment) period
A set period during which a borrower may draw down a loan.
Balloon Repayment
Where the principal is repaid in instalments, with the final being the biggest.
Bilateral loan
A loan facility entered into by a single lender and borrower, usually used for small term loans and usually held by that lender until maturity.
Bonds
Financial instruments where a borrower (called an issuer) promises to repay investors (the bondholders) by a specified date, usually with interest.
Bookrunner
The bookrunner controls the syndication process for best-efforts and underwritten loans. They are likely to agree a list of proposed lenders with the borrower before sending initial invitations and then sell the loan to potential members of the syndicate by contacting lenders likely to be interested in participating in the loan. They also advide the borrower in market conditions to ensure the borrowers loan is attractive to secure a syndicate of lenders.
Bullet Repayment
Where the principal is repaid in a single instalment upon maturity.
Clearing House Automated Payment System (CHAPS)
The UK’s interbank system for large sterling payments. CHAPS uses the Bank of England’s real-time gross settlement (RTGS) system to allow the transfer of funds to be done in real time for each individual CHAPS payment throughout the CHAPS operational day.
Clearing House Interbank Payment System (CHIPS)
Funds-transfer system that is privately owned by the financial institutions that use it. It clears and settles USD denominated cross-border and domestic payments, combining two types of payment systems: a netting system and an RTGS.
Co-ordinator
For self-arranged club loans, the co-ordinator facilitates the smooth execution of the transaction, liaising with lenders’ counsel and all syndicate banks to ensure fluid communication and consensus on documentation.
Commitment fee
A fee charged by a lender to a borrower for an unused credit line or an unutilised loan.
Committed facility
Once the facility agreement has been executed, the lender is obliged to advance money when requested by the borrower (subject to the borrower complying with certain pre-agreed conditions)
Credit/Debit Funds
Debt mutual funds which invest on securities/bonds with lower credit ratings. Generally riskier but with higher chance of returns and tax free dividends.
Debt Advisors
Provide solutions for debt problems and various services related to financial planning.
Documentation Bank
This is the bank or banks that are responsible for managing the documentation process. They are also often the facility agent. The documentation bank appoints lawyers for the lenders, acts as principal negotiator of loan documents with the borrower, often alongside the mandated lead arranger, negotiates comments on the documents from the proposed syndicate lenders and organise the signing of the documents and any powers of attorney needed.
Euroclear/Clearstream
Financial companies that specialise in the settlement of securities transaction.
Facility Agent
The facility agent represents the lenders during the life of the loan, managing the information and cash flows between the lenders and the borrower. The Facility Agent acts as an agent for the lenders but is paid for by the borrower.
Front running
Front running is when an underwriter or arranger of a loan facility actively encourages a bank (or other investor), which is considering taking a primary participation in the syndication, to wait for the secondary market.
Hedging Agreement
The hedging agreement is a form of derivative used to offset financial risk.
Information Memorandum
The information memorandum contains legal, financial and commercial information on the borrower’s business and the proposed loan facility. It is circulated to potential syndicate investors to assist in their decision of whether or not to join the syndicate.
Intercreditor Agreement
Seeks to regulate the respective rights and ranking of creditors providing finance to the same borrower. It is made between the parties involved in a loan transaction, including (amongst others) the obligors, the senior lenders, any mezzanine lenders and any other subordinated creditors.
Investment Grade Loan
Typically includes loans made to government and loans made to blue chip companies, i.e. those entities with high credit ratings (Baa3/BBB- or higher).
Large Firm
A company having more than £36 million in turnover, £18 million balance sheet total or 250 employees in any one financial year.
Lenders
Lenders are banks or institutional investors who ultimately lend the money to the borrower.
Leveraged Loan
If a borrower’s credit rating is below a specific credit rating (i.e. Ba1/BB+), the loan will be deemed to be leveraged.
LIBOR
LIBOR (London Inter Bank Offered Rate) is an interest rate calculated from estimates submitted by the leading banks in London. Each bank would estimate what they would charge were they to borrow from other banks. It has been discontinued but was the primary benchmark worldwide for short term loans.
Loan Agreement
The loan agreement is the principal finance document and sets out detailed terms and conditions on which the facilities are to be made available to the borrower. The content falls broadly into four categories: key mechanics, key margin protection, key commercial protection and boilerplate provisions.
Mandate Letter
The mandate letter is the document whereby the borrower appoints the arrangers and sets out the terms on which the arrangers will arrange the borrower’s facility. It also may be known as a commitment letter.
Mandated Lead Arranger
The mandated lead arranger leads negotiations with the borrower in all types of syndicated loans.
Nostro Account
A nostro account is a bank account held in another country by a domestic bank, denominated in the currency of the overseas country.
Obligor
A person who owes or undertakes an obligation to another by contract or other legal procedure.
RCF
An RCF provides a borrower with a maximum aggregate amount of capital, available over a specified amount of time (usually the entire life of the loan).
Secondary Loan Market
Refers to the sale and distribution of syndicated loans by lenders in the original syndicate or by subsequent purchasers of the loan.
Security Agent
If a syndicated loan is provided on a secured basis, a lender from the syndicate will usually be appointed as a security agent. The security agent will hold the security on trust for the benefit of all the lenders and any other parties entitled to benefit from the security. Can also known as a security trustee.
Sponsor
Corporate entities that provide support within the financial services industry. They could also be considered the lead arranger/underwriter in a funding round deal.
SWIFT codes
Swift Code is a code that helps overseas banks identify which bank to send money to.
Swingline Facility
A swingline facility is a very short-term loan (generally no longer than 5 business days), typically provided by a subset of RCF lenders which permits amounts to be borrowed, often on the same-day that a utilisation request is made.
Tenor
Tenor refers to the length of time remaining until the loan is due to be repaid.
Term Loan
A committed facility, which may or may not be secured, the provides a specific amount of money with a specified repayment schedule. It is typically used when a company requires long-term financing for a specific project/purchase.
Term Sheet
The term sheet summarises the commercial terms of the proposed financing, i.e. the terms on which the lenders are willing to lend to a borrower, and is used as a basis for further negociations and the first draft of the loan agreement.
Termed-out
There is usually an option that allows the borrower to convert utilisations under the RCF into a term loan. After such an option has been exercised the relevant RCF is referred to as having been termed-out. This is usually subject to giving the lender a specified period of notice and paying a fee. Typically the repayment date for the term loan will be after the expiry date of the original RCF, effectively reclassifying the short-term debt to a longer-term debt.
Trans-European Automated Real-time Gross Settlement Express Transfer System (TARGET2)
The RTGS system for the Eurozone and the settlement system for cross-border payments in euros. Its use is mandatory for the settlement of any operations involving the Eurosystem.
Underwriter
The arranging bank group, usually a relationship bank that commits to the entire (or a portion of the) loan amount, and takes market risk of disruption.
Vintage Fund
Vintage year in the private equity and venture capital industries refer to the year in which a fund began making investments or, more specifically, the date in which capital was deployed to a particular company or project.
White List
A list of companies that could come into the deal.