Further Revision

Question 1

What is syndicated lending

Answer 1

2 X tad

2 FIs

Terms and conditions

Common agent

Common documentation

Question 2

What happens with the portfolios after syndicated lending

Answer 2

Diversification

Question 3

What are the benefits of syndicated lending

Answer 3

Banks obtain funds:

Quicker

Lower cost

Greater amounts

Question 4

Explain a secondary eurobond

Answer 4

Over the counter bond

Direct with dealer

Minimum deal is 25k

Question 5

What is the main aim of syndicated lending

Answer 5

To spread the risk of a borrower default across multiple lenders

Question 6

What is a primary Eurobond

Answer 6

Handled by an international banking syndicate with a 3 tier structure:

Lead

Underwriters (insure the bond issue )

Selling group (around 30-50 banks, earn commission, receive details)

Question 7

What is the three tier structure for the Eurobond primary market

Answer 7

Loans U Seek

Lead manager

Underwriter

Selling group

Question 8

What is the aim of the UKAR

Answer 8

To maximise the value of debt under the Bb and NR mortgage book

For the benefit of taxpayers who bailed out both the banks

Doesn’t deal with customers directly, instead continues to service debt with Bb and nr

Question 9

What is the personal savings ratio

Answer 9

Examines the relationship between personal sector savings and total personal disposable income

Less compulsory deductions

Question 10

What political factors should be taken into account for country risk

Answer 10

S P S E

Stability

Political leadership

Social conditions

External relations

Question 11

What is the definition of country risk?

Answer 11

Distinguishes national from international

Involves an appraisal of the economic and political situation of a borrowers country

In order to assess the risks involved

Question 12

What is country risk assessment largely dependent on?

Answer 12

Statistics

Question 13

What are the economic factors to be considered for country risk

Answer 13

Sovereign credit rating

Domestic economic factors (output of goods and services)

Country’s ability to increase real output

Inflation rate

Economic structure (agriculture sector is a key guide to country’s stage of economic development)

Imports/exports

Reserves

Debt service ratio and current account surplus or deficit

Question 14

What did the eurozone debt crisis of 2009 highlight

Answer 14

Risk of collapse

Hinged on capacity of leaders

Sustainability

Countries living beyond means

Question 15

The eurozone was on the brink of

Answer 15

Collapsing

5 eurozone countries living beyond means:

Greece
Cyprus
Portugal
Spain
Ireland

Question 16

What was the Eurozone rescue plan called and what did it involve

Answer 16

The Brussels accord

Write off 50% Greek debt

Banks to raise 115billion in new capital

Eu bailout fund

Cyprus 2.5billion loan from Russia

Question 17

What does the future of eurozone look like

Answer 17

Bleak

Currency instability and lack of confidence

Question 18

Eurozone can only work if…

Answer 18

Countries are better off inside than outside

Doesn’t look that way

Large debts, lack of competitiveness, and decline in economic activity