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Syndicated Loan Product Architecture

Contents

Syndicated Loan Product Architecture.................................................................................................1

1 Syndicated Loan Product Scope..........................................................................................................3
2 Syndicated Loan Product Overview....................................................................................................4
2.1 Business Description....................................................................................................................4
2.2 Business Flow..............................................................................................................................5
3 Overall Architecture............................................................................................................................6
3.1 Deal Summary..............................................................................................................................7
3.2 Facility Summary.........................................................................................................................8
3.3 Loan Contract Summary / Loan Contract....................................................................................9
3.4 Facility Commitment and Loan Contract Position.....................................................................12
3.5 Facility Notice Type...................................................................................................................13
3.5.1 Repayment Notice...............................................................................................................14
3.5.2 On-Going Fee Notice..........................................................................................................15
3.5.3 One-Off Fee Notice.............................................................................................................17
3.5.4 Rollover Notice...................................................................................................................18
3.6 Pricing Change Notice...............................................................................................................19
3.7 Letter of Credit...........................................................................................................................20
3.7.1 Letter of Credit Issuance.....................................................................................................21
3.7.2 Letter of Credit Balance Notice...........................................................................................22
3.7.3 Letter of Credit Amendment Notice....................................................................................24
3.7.4 Letter of Credit Termination Notice....................................................................................25
3.8 Loan Contract Notice Type........................................................................................................26
3.8.1 Drawdown / Rate Set Notice...............................................................................................27
3.8.2 Interest Payment Notice......................................................................................................28
3.9 Lender Position History Message..............................................................................................31
3.9.1 Lender Position History......................................................................................................32

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Version

Date Version Editor Comments

16-Dec-2007 1.0 Bhavik Katira Initial version created.
17-Dec-2007 1.1 Bhavik Katira Updated to reflect changes after initial coordination committee
meeting.
4-Jun-2008 1.2 Bhavik Katira Updated to the latest version of the schema together with
annotations. Updated all diagrams to new .png versions.
Trial recommendation version.
2-Aug-2008 1.3 Bhavik Katira Updated the loan product hierarchy to inherit from Identified
Asset instead of Product.
11-Aug-2008 1.4 Bhavik Katira Updated the loan contract identifier to summary.
12-Sept-2008 1.5 Bhavik Katira Overall architecture updated.
23-Sept-2008 On-going and one-off fee references to loan contract and L/C
14-Oct-2008 summaries.
11-Nov-2008 Projected interest amount added to interest rate period.
24-Nov-2008 Share amounts introduced to loan contracts.
Event id added to Facility and Loan Contract notices.
Rollover notice created.
L/C notices created.
New CommitmentAmount structure added to denote utilization
details for the reconciliation object. Lender reconciliation
message created.
Price change notice created.
Beneficiary can be a simple text rather than party reference.
L/C Balance change notice – added draw flag and change
amount.
Updated LoanContractSummary to contain a choice of original
amount or global and share loan contract amounts.
Updated

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1 Syndicated Loan Product Scope

The syndicated loan business working group collectively decided to focus on designing one-way
borrower-centric notifications for the phase 1 release of the standard. These notifications comprise
most of the manual traffic that both agent banks and lenders must process on a daily basis.

The syndicated loan working group extended FpML to cover:

• Syndicated Loan Notifications between Agent Bank and Lenders, including:

o Facility Level Notifications

 Scheduled Principal Repayment Notice
 Unscheduled Mandatory and Voluntary Principal Repayment Notice
 On-Going Fee Notice
 One-Off Fee Notice

o Loan Contract Level Notifications

 Drawdown Notice
 Rate Set Notice
 Interest Payment Notice
 One-Off Fee Notice

In order to fully describe the notifications, it was necessary to design the following supporting
object types, all of which are embedded within various notification types:

• ‘Short-form’ Product Definitions. These are summary objects which, in the future, will
form the foundation for defining the ‘long-form’ loan product:

o Deal Summary
o Facility Summary

• Loan Contract Definitions. These objects describe the value of outstanding loan contracts at
a given point in time. The outstanding loan balance fluctuates over the life of a facility. There
are two variations designed: the short-form summary and the long-form version of the loan
contract:

o Loan Contract Summary

o Loan Contract

• Lender Position Definitions. These objects describe the amount of a facility and loan
contract that a single lender owns at a given point in time:

o Facility Commitment Position

o Loan Contract Position

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2 Syndicated Loan Product Overview

2.1 Business Description

A “Credit Agreement” is a legal document which outlines the various financing options available to
the “Borrower(s)” (referred to with the credit agreement). The financing terms are structured within
the document using a set of well-defined products. Within the loan industry a single credit agreement
is referred to as a “Deal”.

Within a deal there are one or more “Facilities”; in effect, each facility is a distinct credit line with
its own notional limit. Within the secondary loan markets these facilities are often referred to as
“Tranches”. In the FpML language, the business group preferred usage of the term, facility.

Each facility can be “Utilized” up its notional limit. Utilization occurs with one or more “Loan
Contracts”. A loan contract is a single instance of an actual borrowing made and is the source for
generating the interest-based cash flows. The sum of the current outstanding loan contracts is what
was previously referred to as the “Utilization Level of the Facility”. The balance of the loan
contracts could be either static, amortizing/increasing over time or fluctuating on an intra-day basis
(depends on the type of facility and the type of loan contract).

Every credit agreement is managed by an “Agent Bank”. The agent bank is responsible for ensuring
correctness of all cash flow to and from the borrower. Syndicated loans of this type are usually
shared between groups of “Lenders”. The agent bank is also responsible for all lender cash flow.

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2.2 Business Flow

The diagram below represents the high-level flow within the syndicated loan product. The notices
are used for communication of various business events by the agent bank to the lender community.

Agent Bank
originates Deal

Agent Bank
Syndicates Deal

Funded Utilization Unfunded Utilization On-G

Fe

Borrower Drawdown Notice

L/C Issuance
requests a new Notice
loan

Notice
Rate Set Notice

Borrower makes Interest Payment

L/C Fee Notice
interest Notice
payments

Repayment Notice
L/C Balance
Borrower repays
Change Notice
loan
Breakage Fee
(One-Off Fee)

L/C Balance
Borrower Drawdown Notice
Change Notice
redraws loan

Rollover Notice L/C Fee Notice

Loan Rolls Over
Notice

Figure 1: Loan flow showing notice generation

Pricing Changes Price Change L/C Cancellation
Due to Credit Notice NoticePage | 5
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3 Overall Architecture

The diagram below provides an overview of the main objects introduced for this version of the
syndicated loan product space.

IdentifiedAsset

Deal Summary Facility Summary

Loan Contract Letter of Credit
(Funded Loan ) (Unfunded Loan )

Deal Facility Loan Contract

(Credit Agreement ) (Tranche) LC Summary
Summary

Notification
Message

Loan Contract
Facility Notice
Notice

Pricing
Repayment Figure Rollover
2: Syndicated loan On-going
object hierarchy One-off Fee Rate Set Drawd
Change
Notice Notice Fee Notice Notice Notice Noti
Notice

The Loan Contract and Facility Commitment Position objects do not inherit from any existing FpML
structure, since they do not fit into existing definitions of any of the base objects.
LC
LC Issuance LC Balance
Termination
Notice Notice
Notice

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3.1 Deal Summary

The Deal Summary is a high-level representation of the credit agreement.

Figure 3: Deal Summary (short-form)

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3.2 Facility Summary

The Facility Summary is a high-level representation of a single facility within a Deal (credit
agreement).

Figure 4: Facility Summary (short-form)

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3.3 Loan Contract Summary / Loan Contract

The Loan Contract has been defined in both short and long form. Not all aspects have been captured
in each phase but this definition will expand as the standard progresses.

Figure 5: Loan Contract Summary (short-form)

Explanations:
• Although there can be multiple borrower against the loan contract, only the main borrower is
shown for the purposes of loan contract identification.
• It is important to note that only the original amount of the loan contract is represented. This is
the only value that remains constant and can be used for identification purposes.

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This object reflects the full details of the loan contract, as currently defined. Embedded within the
loan contract is the current interest rate period (see next page).

Figure 6: Loan Contract (long-form)

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Explanations:

• The loan contract must exist within a given facility/deal.

The loan contract contains a “currentInterestRatePeriod”. This describes the underlying base and
margin rates currently applied to the loan contract. This is core to the definition of the loan contract.

Figure 7: Interest Rate Period

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3.4 Facility Commitment and Loan Contract Position

These objects are used to define the lender position at a given point in time.

Figure 8: Facility Commitment & Loan Contract Position

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3.5 Facility Notice Type

This is an abstract object type that defines all fields which are common to facility-level notifications.

Figure 9: Facility notice type base object

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3.5.1 Repayment Notice

This template can be used for scheduled, unscheduled (mandatory & voluntary) notices.

Figure 10: Repayment Notice

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3.5.2 On-Going Fee Notice

Figure 11: On-Going Fee Notice

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The on-going fee notification is dependent on the underlying value of the fee margin as well as the
position held by the lender throughout the fee period. The business required us to provide this
information within the Fee Accrual Schedule object, as shown below.

Figure 12: Fee Accrual Schedule

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3.5.3 One-Off Fee Notice

This notice represents the scenario where one-off payments are made by the borrower. These
payments may be associated with a facility or a specific loan contract or L/C level – the fee type will
determine the level.

Figure 13: One-off Fee Notice

The optional loan contract summary provides a possible link for this cash flow to a specific loan
contract.

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3.5.4 Rollover Notice

Figure 14: Rollover Notice

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3.6 Pricing Change Notice

Figure 15: Price Change Notice

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3.7 Letter of Credit

Figure 16: Letter of Credit

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3.7.1 Letter of Credit Issuance

The L/C issuance notice is a simple structure containing the entire letter of credit object to together
with the facility notice header.

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3.7.2 Letter of Credit Balance Notice

Figure 17: Letter of Credit Balance Notice

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3.7.3 Letter of Credit Amendment Notice

Figure 18: L/C Amendment Notice

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3.7.4 Letter of Credit Termination Notice

Figure 19: L/C Termination Notice

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3.8 Loan Contract Notice Type

These notices are actions which take place against a specific loan contract. The loan contract notice
generic type contains either the loan contract summary or full definition of the loan contract.

Figure 20: Loan Contract Notice Type

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3.8.1 Drawdown / Rate Set Notice

This is a notification which alerts the lender community of an upcoming loan contract. The notice
covers only a (vanilla) funded loan.

Figure 21: Drawdown / Rate Set Notice

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3.8.2 Interest Payment Notice

These notices reflect the amount of interest due to a specific lender.

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Figure 22: Interest Payment Notice

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It is important to highlight the Interest Accrual Schedule associated with each interest payment.

Figure 23: Interest Accrual Schedule

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3.9 Lender Position History Message

Figure 24: Lender Position History Message

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3.9.1 Lender Position History

Figure 25: Lender Position History

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