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Chase s strategy for syndicating the Hong Kong Disneyland project

Objectives. Illustrate The process, participants, and economics of syndicated lendingThe key issues in designing a syndication strategyHow many banks to invite?What fees to offer?What share of the loan to hold?Resolution of these questions depend on a variety of factors including economic rewa

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Chase s strategy for syndicating the Hong Kong Disneyland project

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    1. Chase’s strategy for syndicating the Hong Kong Disneyland project

    2. Objectives Illustrate The process, participants, and economics of syndicated lending The key issues in designing a syndication strategy How many banks to invite? What fees to offer? What share of the loan to hold? Resolution of these questions depend on a variety of factors including economic reward, risk tolerance, agency considerations, and contracting (or re-contracting) costs The importance of relationships in syndicated lending The lending process from a bank’s perspective and the differences between making a loan and arranging/underwriting/distributing a loan.

    3. How to bid for the mandate? Risks Joint mandate ? lower underwriting fees Aggressive competition ? reduces profitability Disney’s bad track record Credit issues (long maturity, limited collateral, CFs to be used for CapEx, no willing to subordinate management fees and royalties to debt service) Fully underwritten deal ? underwriting risk Reasons to bid Chase wants to maintain its relationship with Disney Might enhance Chase’s reputation in the region Despite the risks, might be profitable if the deal is designed carefully

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