DNB Markets handles loans that are syndicated in the international banking market.
There are two main types of syndicated loan:
- Bank credit (Revolving Credit Facility)This kind of loan facility can be used fully or partially, according to the borrower’s requirements. A commitment fee is charged on that part of the facility that is not being utilised. The borrower pays interest on the part of the facility that is utilised. The facility is priced with a margin based on the STIBOR rate. The standard period of contract in today’s market is between three and five years.
- Repayment loan
This loan is raised in its entirety within a set period of time (usually a period of between 30-60 days), after which time a repayment structure is agreed.
There is also a secondary market for this type of loan.
Two main types of mandate
- "Underwritten" – The loan amount is guaranteed by the arranger(s), regardless of how much is actually sold to other banks
- "Best effort" – The loan amount is dependent upon how much the arranger(s) sell(s) to other banks.
