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    This document discusses a "best efforts" strategy where the lead arranger agrees to underwrite less than 100% of a loan and attempts to place the remainder with other banks, with the borrower taking the risk that the market does not accept the deal which could result in higher fees or interest rates to entice greater participation from other banks. Specifically, it provides an example allocation of HK$300 million for Chase and HK$100 million each for 30 other lead managers, with the borrower taking on the risk if the full amount is not placed.

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    This document discusses a "best efforts" strategy where the lead arranger agrees to underwrite less than 100% of a loan and attempts to place the remainder with other banks, with the borrower taking the risk that the market does not accept the deal which could result in higher fees or interest rates to entice greater participation from other banks. Specifically, it provides an example allocation of HK$300 million for Chase and HK$100 million each for 30 other lead managers, with the borrower taking on the risk if the full amount is not placed.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    7 views3 pages

    MCB Presentation)

    Uploaded by

    adtyshkhr
    This document discusses a "best efforts" strategy where the lead arranger agrees to underwrite less than 100% of a loan and attempts to place the remainder with other banks, with the borrower taking the risk that the market does not accept the deal which could result in higher fees or interest rates to entice greater participation from other banks. Specifically, it provides an example allocation of HK$300 million for Chase and HK$100 million each for 30 other lead managers, with the borrower taking on the risk if the full amount is not placed.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
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    Strategy 5: Best efforts

    In this strategy the lead arranger agrees to underwrite less than 100 % of the loan (typically the amount it is prepared to hold on its own balance sheet after general syndication) and attempts to place the remainder in the bank market

    Strategy 5: Best efforts (cont.)


    The final allocation would be Chase at 300 Mn. HK$ 30 lead managers at 100 Mn. HK$ each.

    Risk

    The borrower pays the lead arranger an arrangement fee for its services and pays other lenders closing fees for their commitments. Thus, the borrower takes the risk that the market does not accept the deal and that it might have to pay higher fees or spreads to entice greater participation.

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