A party that commits to advance (lend) to a borrower an amount of the total funding of a facility is a lender. An original lender is a signatory lender and original contractual party to a finance facility, such as a mandated lead arranger, co-underwriter, or the loan originator and grantor in a participation.
The purchaser of a loan from another lender after primary syndication is a new lender. The new lender simply replaces the original lender.
Loan syndication creates a contract between the borrower and each syndicate member as original lender. Any subsequent loan sale (novation or assignment) creates a new financial obligation between the borrower and the new lender, which replaces the contract between the borrower and the original lender. By contrast, a participation only creates a new contract between the original lender and the participant, while the contract between the borrower and the original lender remains unchanged.
As participant lenders, institutional investors often invest in B and C facilities. These facilities are particularly favored by such institutions for their bullet repayment characteristics and higher yielding interest margins, compared to the amortizing and slightly lower yielding A facility that banks invest in.