Page 9 - MTIA Summer 2022 Market Brief

Roles in a Hybrid Transaction

HYBRID STRUCTURE

Syndicated Loans
Middle Market/
Notes Loans
Private Credit
Consumer Assets

• Registrar • Administrative Agent • Collateral Agent/
• Collateral • Sub-Agent Trustee Custodian
Administrator/Agent • Document Custodian
• Facility Agent
• SPV Administration • Security Agent • Paying Agent
• Paying Agent • Calculation Agent
• Cash Manager • Backup Servicer

Innovation Tradeoffs

Handling intricate, unique stipulations may strain operations built for efficient,
consistent processing at a global level. The resulting rigidity can make it more
challenging to manage portfolio exposures and risks.

Reporting is a compelling case in point. Managers and investors need visibility into
deals, while high levels of customization risk becoming opaque. Many also need
aggregated data across entire portfolios rather than siloed reports. Custom deals
make “apples-to-apples” analysis more challenging. In addition to transparency,
accuracy, timeliness, and accessibility in loan data and reporting, they need new
ways to analyze risks and returns.

In this context, embedding data into static reports strains resources and makes
extracting data for new insights harder. One intriguing prospect will be a potential
shift in emphasis toward easily ingestible data that enables flexible, self-service
insights. Recipients can thereby tailor and refine dynamic data views rather than
wading through static reports. This possibility changes the role of a service
provider from report creation to data delivery.

More broadly, careful steering is needed as long as the leveraged loan market
faces prolonged complexity and uncertainty. For lenders and sponsors, loan
agents and trustees’ operational excellence and readiness will be essential in
navigating and managing the eventual return to higher volumes once pent-up
credit demand sees supply returning.

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