Currently the arranging banks retain, on average, only about 5% of a term loan. One consequence of these changes in the syndicated loan market is that the arranging bank nowadays aims to distribute as much of the loan as possible to these institutional investors, and keep very little or nothing on their banks. By the end of 2014, the institutional investors’ share in the syndicated term loan market exceeded 70% (see Figure 2).įigure 1 Source of financing of non-financial firms worldwide With the rise of the originate-to-distribute-to-nonbanks model and the secondary market for syndicated loans, institutional investors such as mutual funds and collateralised loan obligations started to provide additional funding for the syndicated term loan market (Bord and Santos 2012). In the early 1990s, a bank that arranged a syndicated loan partnered with other banks to form the term loan syndicate, and the arranging banks kept a substantial share of the loan (20–30%) on its books. Much of the expansion in syndicated lending has been driven by fundamental changes in the syndicated term loan market. In 2016, non-financial corporations borrowed $3.4 trillion worldwide from the syndicated loan market, making this source of funding significantly larger than the issuance of bonds and equity (see Figure 1). Morgan, Goldman Sachs, Bank of America Merrill Lynch, and Barclays Capital in February 2011 and increased the size of the facility to $2.5 billion in September.Syndicated loan issuance – in which banks partner with other financial institutions to originate large loans – has grown dramatically over the last 25 years. The company entered into its previous revolver with Morgan Stanley, J.P. Palo Alto, Calif.-based Facebook in February filed papers to raise at least $5 billion through an IPO. The bridge loan matures one year after the funding date, but no later than June 30, 2014. Facebook paid undisclosed origination fees at closing and will pay an additional 20 bps upfront fee, which is payable on the funding date. If the bridge has not funded by 90 days after Facebook entered into the bridge facility, there is a 10 bps commitment fee on undrawn amounts. Pricing on the bridge opens at L+100, with a 25 bps increase 180 days after the funding date.įacebook can borrow under the facility in a single draw once the IPO closes or 240 days after the IPO closing date. Facebook also pays a 10 bps commitment fee. Facebook is not rated, but the pricing on the deal is in line with recent single-A deals as reported by LCD News. Morgan and Morgan Stanley acted as joint lead arrangers for the bridge loan, with Goldman Sachs, Bank of America, and Barclays listed as joint bookrunners. Morgan acted as sole lead arranger for the revolver, with Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch, and Barclays Capital listed as joint bookrunners. The bridge facility is available to fund tax withholding and remittance obligations related to the settlement of restricted stock units in connection with the proposed IPO, the filing said. Facebook this afternoon disclosed that it has obtained a $5 billion, five-year unsecured revolver to replace a $2.5 billion revolver that was set to mature in 2016, according to a regulatory filing. In connection with its planned IPO, the social-networking site also disclosed that it has obtained a $3 billion bridge loan.
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