Benefits Of Appointing A Security Agent

Forming a key part of the loan and debt capital markets, Abigail Holladay, Ocorian Associate Director - Product Development examines the role of a security agent in unitranche debt financing and identifies the benefits they provide to transacting parties.

Following the financial crisis, the leveraged buy-out market was brought to a grinding halt. Changes to the capital adequacy requirements simultaneously increased the amount of capital that had to be held against any loan, as well as increasing the term of a loan considered leveraged to greater than five years. Banks swiftly responded by withdrawing from the loan market and where they did remain, they reduced the length of all new loans to below the five year threshold, consequently reducing absolute amounts of liquidity available for transactions. The resulting excess demand was soon met by amongst others, alternative debt providers, direct lending funds and unitranche debt.