A new service that automates settlement and provides speedier closings of transactions in the primary loan market has been launched.
The cloud-based service from Trade Settlement is targeted towards administrative agent banks, which hold the lists of lenders and the amounts allocated to each loan investor. For example, a buyside company investing $100 million, that amount may be split across 30 – 250 sub accounts that the buyside company manages. Each sub-account must then commit and sign for the loan amount and facilities bought and to be paid for by its particular fund.
Trade Settlement’s platform expedites payment calculations from the administrative agent to the buyside in a cloud based and fully automated manner. Administrative agents can input data electronically into the platform and the system will alert investors with the allocations of the amounts and the investors can the make sub allocations to various funds online.
The Loan Syndication & Trading Association’s statistics currently show corporations routinely borrowing amounts in excess of $5 billion from multiple lenders often to fund acquisitions. According to an industry observer, “These new primary loans are huge, complex, heavy on paperwork, and involve lots of lenders, lawyers, and banks. They all need perfect execution as fast as possible. That’s why many banks will migrate to TSI’s new system.”
“The market has seen a lot of re-pricing of syndications and new buyers, also from ETFs that includes loans, so faster settlement is needed for the primaries,” says Pat Loret de Mola, TSI’s founder and CEO. “There has been industry-wide discussion regarding some form of delayed compensation fees – the loan investor wants the new loan investments transferred to them as soon as it comes in. It should not take three or more days, assuming the pre-requisite KYC diligence has been satisfied. TSI’s new service now also aids the KYC and Fatca Compliance for onboarding new and existing investors and can help admin agents reduce the overall time for primary settlements.”
TSI’s primary dashboard will provide administrative agents with a 360 view of all allocations across all lenders in the deal. Managers are presented with real-time figures for total closed today, total to date, and total unsettled which can be exported to Excel and emailed directly from the platform.
The new complete Primary system includes a high speed importer for getting lender lists into the system quickly and accurately, verifies available KYC (Know Your Customer) information such as Administrative Details and Tax Forms and allows customization of the standard Institutional Allocation Confirmation per deal.
Loret de Mola added: “Based on our decade of serving as an all-electronic settlement agent for the private loan trading market, we knew we could do better than current, mostly manual systems or other outsourcers. So we built this new, easy-to-use cloud-based capability. It is now available to all and is packaged with our follow-on secondary settlement capabilities.”
She said clients will be offered promotional pricing on a first come, first-served basis.
Primary Syndication Settlement in the Cloud?
A cloud-based service that automates settlement and provides for speedier closings of transactions in the primary loan market has been launched.