In the face of the evolving global corporate loan market in which banks are prone to syndicate to raise loans, syndicate formation is a relevant question. As being an important source of capital, an understanding of how this market operates is worth acquiring. Also, gaining knowledge on syndicate formation and the important relationships therein is important. This master’s thesis contributes to the syndicated loans literature by providing evidence regarding the nature of ongoing relationships between syndicate members, more specifically, the exclusive relationships between lead arranger(s) and borrowers are analysed. Using banks in the syndicated lending market, this master’s thesis discusses the likelihood of loan syndicate formation, after previous lending and other kinds of relations. It is found that, when focusing on the relation between the borrower and the lead arranger, their home country is of importance in syndicate decisions. If syndicate members, lead arranger(s) and borrowers, have their headquarters in the same location or country, the more likely a loan syndicate is formed between those parties. With these results, this master’s thesis shows that relations (as in locational proximity) lead to strong connections between lending and borrowing syndicate partners, leading to a higher likelihood of syndicate formation. Key words: project finance lending, syndicated (project finance) loan market, syndicated lending, borrowers, lead arrangers, previous relationships, locational or geographical proximity.
Faculteit der Managementwetenschappen