Definition of Syndicated loan:
A syndicated loan, also known as a syndicated bank facility, is financing offered by a group of lenders—referred to as a syndicate—who work together to provide funds for a single borrower. The borrower can be a corporation, a large project, or a sovereign government. The loan can involve a fixed amount of funds, a credit line, or a combination of the two.
Large loan arranged jointly by two or more financial institutions to share the risk involved. Also called multibank credit or syndicated credit.
Syndicated loans arise when a project requires too large a loan for a single lender or when a project needs a specialized lender with expertise in a specific asset class. Syndicating the loan allows lenders to spread risk and take part in financial opportunities that may be too large for their individual capital base. Interest rates on this type of loan can be fixed or floating, based on a benchmark rate such as the London Interbank Offered Rate (LIBOR). LIBOR is an average of the interest rates that major global banks borrow from each other.
How to use Syndicated loan in a sentence?
- A syndicated loan, or a syndicated bank facility, is financing offered by a group of lenders—called a syndicate—who work together to provide funds for a borrower.
- The syndicated loan was monumental in securing our market position because it allowed us to deliver to a new continent.
- The borrower can be a corporation, a large project, or a sovereign government.
- We wanted to build a new franchise convenience store in a small town so the Credit Union and the Bank collaborated in a syndicated loan to make our franchise purchase a reality.
- As a 3 million dollar loan was too much risk for one financial institution to assume, ABC Company was forced to obtain a syndicated loan from Greedy bank, inc and High Interest Banks of America.
- Because they involve such large sums, syndicated loans are spread out among several financial institutions to mitigate the risk in case the borrower defaults.
Meaning of Syndicated loan & Syndicated loan Definition