Prospective borrowers commonly seek the arranger for their syndicated facilities. Where a borrower desires competition for the position of lead arranger and competitive bidding, an invitation to bid is extended to several potentially interested arrangers. When funding certainty is critical, borrowers request fully underwritten bids, where banks commit to provide the full amount on specific terms and pricing.
Where borrowers seek competition for the position of lead arranger and competitive bidding, they send an invitation to bid to several potentially interested banks that states the borrower’s financing needs and requests a bid for the mandate to arrange, structure and distribute the financing. The invitation may only go to the borrower’s key relationship banks or also to other banks with the necessary expertise. When funding certainty is critical, borrowers request fully underwritten bids, where banks commit to provide the full amount on specific terms and pricing.
Invitation to Bid ⇒ Bank
A term sheet is prepared and submitted by interested banks to the prospective borrower (or occasionally by strong borrowers to the banks) summarizing the key commercial terms (amount, term and margin) and conditions of the proposed financing, as agreed in principle. It is the key document upon which borrowers base their decision on awarding the mandate.
Term Sheet ⇒ Borrower
A mandate letter is a borrower’s written authorization to one or more banks to assemble a syndicate to raise the financing required by the borrower. It outlines the basic loan terms and conditions that were established in principle between the borrower and mandated lead arrangers (MLAs) bank in the term sheet and is submitted to banks either to form a management group or seek participation in the general market. The mandate letter will usually be signed and issued to mandated banks with the banks’ term sheet attached to it.
Mandate Letter ⇒ MLA(s)