Syndication Loan

IFSC Banking Unit – Syndication Desk:

At IFSC Banking Unit, syndicated loans are being arranged on an underwritten or best-efforts basis, or by way of a club deal.

Underwritten Deal: IFSC Banking unit as underwriter / a book runner

• IFSCBU will act as an arranger and unnderwrite the entire commitment, and then syndicate the loan.
• If the loan is not fully subscribed, the underwriters will be obliged to lend the underwritten sum of money to the borrower themselves.
• The underwriters may later try to sell their commitment (or part of their commitment) to investors in the secondary market.
• Loans are syndicated on a best-efforts basis.

Best-Efforts Deal: IFSC Banking unit as arranger / co-arrangers

• Best-efforts deal is one which is not underwritten by us.
• IFSCBU will commit to a certain amount of the loan, and undertake to do their best to find other lenders to provide commitments for the remainder.
• IFSCBU does not guarantee the tie up / financial closures as it is working on the basis of best effort.

Club Deal – IFSC Banking Unit as a Coordinator

• A club deal will usually involve a loan that is pre-marketed to a group of Bankers with whom IFSCBU is having banking relationship or partnered in syndication deals in the past.
• The borrower may arrange the club loan itself, or alternatively, an IFSC Banking unit may be involved.

Credit facilities offered:

Term Loan Facility: ECB and Foreign Currency term loans

• The lender commits to lend to the borrower a specified amount of money over a set period of time.
• The period of a corporate term loan is generally between one and five years.
• Commitment fees in respect of committed undrawn amounts during the availability period
• Interest on accrues at a floating rate
• The loan may be repaid in instalments (amortising) or bullet payment.

Revolving Loan Facility

• Each loan is borrowed for a set period of time, usually one, three or six months, after which time it is repayable but may be redrawn.
• Repayment of a revolving loan is achieved either by schedule reductions in the total amount of the facility over time, or by all outstanding loans being repaid on the final maturity date of the facility.

Other services:

Role of Facility agent

• IFSCBU can act as facility agent even in the deals where it is not participating.

Account Bank - Opening and Maintaining Current / Escrow account.

• IFSCBU can open and maintain current / escrow account on behalf of the lenders and operate as per the waterfall mechanism of the agreement.

• Single Point of Contact
• Better co-ordination with the multiple lenders
• Funds can be raised at competitive price.
• Flexibility in structuring &pricing.
• Save the time and efforts of approaching / negotiating with individual banks for sanction.

• Documentations as per the nature of the transaction based on the draft provided by Loan Market Association (LMA)

Interest rate is not uniform and depends on the following factors:

• Tenor of the facility
• currency of the loan
• External / Internal credit rating of the borrower
• Security coverage.

• Terms and conditions are depend on the nature of transaction and in line with the LMA