In the frantic world of syndicated lending, the appointment of a facility agent is pivotal in ensuring the success of a transaction. But what exactly do they do and what does best practice look like? Director of Transaction Management, Chris Wilson, examines the key elements of the role.
What is a facility agent?
A facility agent acts as the primary point of contact between the transaction parties to a syndicated loan. They are appointed to manage the communication between the borrower and the lenders in addition to handling the flow of funds and providing ongoing transaction support.
Why appoint an independent facility agent?
Loans involving multiple lenders are often complex and operationally onerous. It can be difficult to keep on top of cash flows, transfers and communications between borrower and lenders, and to ensure the loan administration is kept up-to-date. Appointing an independent facility agent can remove the administrative burden of this process and create efficiencies within your internal teams.
The capital markets are also subject to a growing number of stringent regulations and transacting parties need to effectively manage potential conflicts of interest - especially in workout or restructuring scenarios. As a result, lenders increasingly find themselves seeking independent service providers to administer the loan agency aspects associated with their portfolios. This occurs either from the outset or by stepping in as a successor agent during the lifespan of the transaction.
What should I look for in a facility agent?
An effective third party facility agent will be truly independent and have no other commercial interest in a transaction, thereby positioning itself to be able to operate in a conflict-free environment.
A facility agent also needs to have extensive market experience and specialist knowledge to support a service offering covering a wide range of loan financing that extends to complex leveraged finance and multi-currency transactions.
Speed and flexibility are of upmost importance in the context of the syndicated loan market. Therefore engaging with an independent facility agent that offers a bespoke client service and streamlined new business on-boarding process is paramount. This enables the facility agent to promptly assess a transaction and be responsive to client needs.
Ease your administrative burden
Our loan administration team, which includes Nordic Trustee, the leading loan agency provider in the Nordic region, combines extensive market experience and first-class IT infrastructure to provide independent third-party facility agent services that remove the manual tasks from your internal teams and drive efficiencies.
Get in touch with our team below to discuss how our facility agent services can benefit your operations, or click here for more information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
