Syndicated loans - underwriters show how to run an issue campaign

A good example of how financial media can be used to develop an issue campaign can be seen by recent coverage on syndicated loans.

Syndicated loans is another area being affected by the spreading ripples of the subprime financial problems. Just as subprime mortgages are packaged up and sold off, so corporate loans are packaged up and sold off by the lead institution(s). However this has become increasingly difficult in the general and gathering credit problems and for example the backers of Boots, a massive management buyout, at the top of the market, has only been partially syndicated, leaving the lead banks nursing a potentially significant hangover on their balance sheets.

The conference, sponsored by Reuters, has highlighted that the major underwriting banks are refusing to discount the syndicated loans on their books unlike US banks. Other members of the large underwriting community, perhaps feeling the lack of business, are highlighting the role of some European banks which are not discounting below par i.e. taking a loss.

By bringing it to wider attention and media coverage, they are ensuring that the investment community will be discounting these loans on the underwriting banks' books and so in effect forcing them to probably start discounting over the coming months.