Key points
- Terms in a typical syndicated term loan B have converged to an increasing extent with those of high-yield bonds in recent decades, leading some to argue that such loans should be considered securities.
- A recent Second Circuit case rejected that argument, holding that syndicated term loans are not securities; a contrary ruling would have caused enormous disruption in the trillion-dollar syndicated loan market.
- The syndicated loan market offers borrowers and lenders greater flexibility, and avoids the registration, ongoing disclosure costs and burdens imposed by securities laws as well as the trading and information-sharing restrictions of that regime.
For further information, please contact:
Danielle Li, Partner Skadden
danielle.li@skadden.com
