Basics Flashcards
What is an overdraft?
uncommitted facility on standard terms and conditions.
Re-draw up to a specified limit, legally repayable on demand.
What is a term loan?
Committed facility, borrower may draw amount down in single or several tranches.
repayable by end of term.
What is an RCF?
Useful for working capital.
Flexibility of overdraft with certainty of term loan.
Specific amount of capital made available by bank over a specified period.
Subject to minimum size, notice and timing, borrower can draw down and repay as chooses.
Why is syndication used?
Large loans
Capital Requirements - bank may be prohibited from taking so much risk with a single borrower.
What is a Security Trustee?
Holds security on benefit for the syndicate lenders.
Security created in favour of the security trustee for the benefit of ‘Lenders’ defined as those lending from time to time.
