Agent (Banking & Finance) definition

View the related practice notes about Agent (Banking & Finance)

The security agent

What is a security agent?The role of the security agent is very important in syndicated transactions. In a syndicated loan transaction, the security agent (also known as the ‘security trustee’) is the party that holds the transaction security on trust for the lenders and any other secured creditors, such as hedging counterparties. Despite being more commonly referred to as a security agent, the nature of the role is not one of agency but one of trusteeship.The use of a trust structure to hold the transaction security has significant advantages in syndicated lending where the group of creditors typically changes over time as and when lenders transfer their loans to new lenders (see Practice Note: Introductory guide to loan transfers). The key advantages are as follows:•the trust structure avoids the need for security to be granted separately to each of the creditors, which can be expensive and time consuming, and•the security is vested in the security trustee for the benefit of the existing secured creditors and any parties that become secured...

The facility agent

This Practice Note covers the role and duties of the facility agent in a syndicated loan transaction (defined in the Loan Market Association (LMA) documentation simply as the ‘Agent’), with reference to relevant provisions in the LMA’s investment grade and leveraged facilities agreements. It also considers the rights of the facility agent and methods it may employ to protect itself and exclude liability whilst carrying out its role as facility agent. This Practice Note also considers the mechanisms for the appointment and resignation of the facility agent.What is a facility agent?The facility agent is an important party in a syndicated loan transaction. In summary, it acts as the representative for the lenders under the facility agreement and as a ‘post box’ between various parties in the transaction. It’s role is an administrative one, managing the communication and money flow between the lenders and the borrower.With such a critical role in a syndicated transaction, it is very important to set out the scope of its role and duties very precisely in...