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Does the Loan Syndications and Trading Association aspire to become the Fannie Mae of the commercial loan world?
Not exactly. But over the holidays the corporate loan market trade association placed on its Web site the fruits of its efforts to create standard credit agreement provisions that are anticipated to increase liquidity in the loan market as well as reduce administrative closing costs. The initiative echoes the approach of such government-sponsored entities as Fannie Mae and Freddie Mac, which have dramatically increased the liquidity of mortgage loans that conform to provisions they have standardized. A source at one large institutional investor worried, however, that the standardized provisions could inadvertently hurt the syndicated loan market.
"One of the most appealing aspects of the syndicated loan market is its flexibility in terms and timing compared with the fixed income market. It's very flexible structurally, and issuers like that," the source said. "This helps bring the market toward standardization ... but to the extent you go too far, it...