CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers
Compared with a bank loan, a syndicated loan is best described as a loan that:
A syndicated loan is arranged by a lead bank and funded by a group of lenders, each taking a share. This spreads the credit exposure on a large borrowing. It is not a retail product and is not necessarily secured by one asset.
- Ais issued only to retail investors
- Bis arranged by a lead bank and funded by a group of lendersCorrect
- Cis always secured by a fixed charge on a single asset
Explanation
In a syndicated loan one or more arranging banks organize the facility and a group of lenders each fund a portion, spreading credit risk for large borrowings. It is not sold to retail investors, and security is not mandatory or restricted to a single asset.
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