Large Bank Supervision Forum 2023

Origination Process and Participants

 Hires arranger/agent/professionals to assist in raising capital  Capital raising may include secured loans and junior capital  May be simultaneously raising equity capital  Structures the facilities  Negotiates documents  Information disclosure (book)  Administrative tasks  Invites/solicits lenders (book running)

2022 US Leveraged Loans Top Lead Arrangers by Market Share 1  BofA Securities  JP Morgan  Wells Fargo  Citi  Truist Securities  Barclays  Goldman Sachs  PNC Financial Services Group  Morgan Stanley  RBC Capital Markets  Mitsubishi UFJ Financial Group  BMO Capital Markets  Citizens Financial Group  US Bancorp  Deutsche Bank

Borrower (Issuer)

Bank (Agent or Arranger)

 Asset managers and IBs  CLOs  Institutions  Retail mutual funds  Banks

Lenders (aka Assignees or Investors)

1 Source: Bloomberg; data sorted by total volume. Data as of December 31, 2022

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

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Key Features, Types and Structures of Credit

Term Loans

 Senior secured loans with five to seven-year maturities  Floating Rate  Average Life 3-4 years due to refinance or other event  Generally have Excess Cash Flow recapture provisions

Term Loan A

 Fully amortizing – amortization may be back-ended

Term Loan B

 

Minimal amortization

 Cross collateralized, cross defaulted, same public debt rating as Term Loan A

Revolving Lines of Credit

May be asset based

 Provides ability to draw, repay, draw over multi-year period  Multiple structures and options, including terming-out  Uncommitted credit facilities (can be term loans or revolvers)  Access subject to covenant compliance and market demand for additional loans  Rights of second lien lenders are subordinated to rights of 1st lien lenders – generally inappropriate for commercial banks

Guidance Line for Acquisition (aka “Greenshoe”)

Second Lien Loans

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

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