Module 4 · Chapter 12

Transfers and the Secondary Market

Lenders often sell their share of a loan before it is repaid. This chapter shows how a new lender steps in, when the borrower must agree, and how risk can move without the borrower seeing it.

≈ 11 min read 8-question test

In this chapter

  • Why lenders sell their share of a loan
  • How a Transfer Certificate swaps one lender for another
  • When Atlas must agree, and how risk can move without its knowledge

12.1Loan transfers in one paragraph

A lender's share of a syndicated loan is an asset, and lenders sell it. A seller usually wants to leave the loan completely, including any duty to lend more. So the agreement needs a way to move obligations as well as rights, without asking every party each time.

Clause 20 of the Sunrise agreement provides that way. It also protects Atlas: Atlas has a say in who joins, and a new lender cannot cost it more than the old one.

Key point

Lenders lend more cheaply when they know they can sell. Clause 20 makes selling easy, and limits the harm that easy selling could do to the borrower.

Also in this chapter

  1. Why lenders sell their loans
  2. Why a transfer needs novation
  3. Who may buy, and when Atlas must agree
  4. What else a borrower can ask for
  5. Minimum size, the register and the transfer date
  6. A transfer cannot raise Atlas's costs
  7. Sub-participation: selling the risk, not the loan
  8. What the buyer takes on
  9. Your job

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