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5:00Loan Syndication: How 20 Banks Share One $5B Loan
No single bank wants $5 billion of exposure to one borrower. So one bank wins the mandate, underwrites the whole thing, then quietly sells most of it to nineteen others — and keeps the trophy.
A syndicated loan is a single facility, on one set of terms in one credit agreement, funded by a group of lenders. It exists because a $5B loan would blow through any one bank's single-name concentration limits and regulatory capital appetite. Syndication spreads that exposure across many lenders while giving the borrower one document, one set of covenants, and one point of contact.
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