CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers
In a syndicated loan, a lender that sells part of its existing commitment to another institution after the loan has closed is most likely participating in the:
The lender is most likely participating in the secondary loan market. After a syndicated loan closes, lenders can sell or assign portions of their commitments to other institutions. Commercial paper issuance and equity tender offers are unrelated to trading existing loan interests.
- Asecondary loan market.Correct
- Bprimary issuance of commercial paper.
- Ctender offer for the borrower's equity.
Explanation
Syndicated loans can be sold or assigned after origination, and trading of these existing loan interests takes place in the secondary loan market. Commercial paper is a separate short-term instrument, and a tender offer concerns equity.
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