Syndicated Lending – Case Study Answers
It is important to note that there is no one correct answer. This case study is meant to challenge
you to think about the different ways a syndication can be put together and the logic behind it.
The solution will look at suggestions and walk through that logic.
Requirements
Your team at BofA won the agency mandate in a competitive bid situation over JP Morgan
Chase. ACME has a current BB+ business risk rating (BRR) per S&P/Moody’s.
1. Devise a syndication strategy – how would you structure the syndication among all the
banks? Think about roles and allocations.
• When devising our syndication fee, there are two pieces of key information that we
have taken away from the meeting notes with ACME to consider:
i. Minimizing syndicate fees – having only the number of underwriting banks
necessary will not only help achieve this, but also fewer participants generally
means less room for miscommunication and fewer challenges in
coordinating schedules for meetings.
ii. Successfully distributing the deal - according to bullet 2 of your notes, ACME
has plans to expand into Canada and would like to have investors of its name
globally. This deal going well will strengthen BofA’s rapport with ACME and
given their growth plans, may lead to BofA being offered more mandates
and earn additional syndication fees as ACME continues to grow.
In addition to JP Morgan stating they are ready and willing to take a similar
amount of risk when partnering with BofA, you are keen to give them a
sizeable allocation because (1) JP Morgan already has a good existing
relationship with the client and (2) they have a strong global distribution
platform. As syndicate partners, you know things will go smoothly.
• Given the above information, a proposed syndicate structure could be to have 5
syndicate members:
o 1 Lead Arranger (you, BofA)
o 1 Co-Lead Arranger (JP Morgan)
o 1 Agent Bank (TD Securities)
o 2 Participant Bank (undisclosed names)
