Bilateral, syndicated and club arrangements

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Bilateral, syndicated and club arrangements
  • Bilateral loans
  • Syndicated loans
  • Club loans
  • Comparing bilateral loans and syndicated loans

Bilateral, syndicated and club arrangements

One of the features used to categorise loans is the number of lenders involved. A loan involving one lender is known as a 'bilateral loan'. A loan involving more than one lender may be a 'syndicated loan' or a 'club loan'. Multiple lenders can also be indirectly involved in the same loan by way of sub-participation.

This Practice Note explains the key features of bilateral loans, syndicated loans and club loans.

Bilateral loans

A bilateral loan is a loan involving a single lender. There may be a single borrower or multiple obligors involved, ie the borrower and other companies in the borrower's group as guarantors and/or security providers.

Bilateral loans are normally used for loans of relatively small amounts and where less complex financing arrangements are required (eg a simple overdraft or term loan). Where the borrower requires a large loan, a single lender may be unwilling or unable to advance the full amount required by the borrower. In these cases, a syndicated or club loan may be a better option.

Syndicated loans

A syndicated loan is one in which two or more lenders (often many more lenders) join together to provide funding to a borrower or group of borrowers. The terms of this arrangement will be shared by all parties. As such, each party will execute a single facility agreement and there will be

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