CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers
Compared with a corporate bond issued in the public market, a syndicated loan is most likely to be:
A syndicated loan is most likely arranged by a lead bank that sells portions to other lenders. This lets a large borrowing be shared among several institutions. It is not a retail public offering, and these loans usually have floating rates and covenants.
- Aarranged by a lead bank that sells portions of the loan to other lendersCorrect
- Bsold directly to retail investors through a public prospectus
- Cissued only with fixed interest rates and no covenants
Explanation
In a syndicated loan, a lead arranger bank originates the loan and distributes portions to a group of lenders, so one borrower deals with a single arranging bank. Syndicated loans are typically not sold via a public prospectus to retail investors, and they usually carry floating rates and covenants, so the other options are wrong.
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