Alternative Loan Financing (ALF) has been launched by BNY Mellon that will provide an alternative structure for US syndicated loans to be used as eligible collateral in a wide range of financing solutions.
Traditionally, syndicated loans have not been easily transferable between counterparties and ALF will enable clients who wish to use syndicated loans as collateral as it provides clients with improved costs of collateral usage, improved liquidity and potentially lower funding and set-up costs.
As BNY Mellon retains control of the syndicated loans, clients will receive independent third-party administration of the loans, which will include the handling of all settlement and loan administration requirements, receiving and reconciling all principal and interest payments.
Jocelyn Lynch, managing director at BNY Mellon corporate trust, said: “Given the shortage of quality collateral in the capital markets, there is a great demand for loans as an asset class since they are generally perceived as good quality collateral.”
“[ALF] gives investors the opportunity to easily invest in this asset class.”
