Bank Debt in Brokerage Account
Noob question:
Are there any brokerages out there with the capability to trade/settle TLBs into a PA?
Noob question:
Are there any brokerages out there with the capability to trade/settle TLBs into a PA?
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Nearly all syndicated loans have minimum assignment sizes of $1mm (unless you get a company waiver) and many require QIB reps as well. Most also have company right of refusal and bank KYC requirements as well.
your compliance wouldn't throw a fit over something like this?
Perhaps they would throw a fit. Who knows. I just want the optionality for future reference, since I am active in the space.
As for the minimum assignment size - its a good point. But nobody cares. We regularly buy/sell slugs less than $1mm. Why would the company refuse to have me own their loan? Its not like im gonna call a default.
Either way, it looks like this is a non-starter, unfortunately. Im starting to get the feeling its impossible to own this stuff unless you have an outsourced settlement team.
Yeah, usually it's not too hard for institutions to get a waiver, plus there're usually carve-outs for things like selling stub positions or selling sub-mm amts between existing holders (generally including the agent), but the rule exists as an option for the company-to allow them to manage their lender base. You SAY you're not going to call a default but the borrower can't really ensure that, can they? It's also administratively burdensome in a million other little ways too-interest elections, other amendments/consents, pay-downs, wiring of interest payments etc.
One thing I HAVE seen/heard of on rare occasions are participations (rather than assignments) between some entity and an LLC set up by an individual for that purpose (most commonly to co-invest w a fund/employer), but I've never seen it in the construct of a regular-way brokerage account.
Interesting - thanks for that.
That strategy could work pretty well if I round up some friend money. Problem is, would still need to hire a loan ops outsourcing company to management closings/settles. I wonder how the economics would look on that
We just recently outsourced our loan ops, so I will look into it and update here eventually (incase anyone cares)
You could do the paperwork yourself-it's not really HARD per se, there's just a lot of it inherent in trading loans on any real scale, and there's a lot of recurring admin work you don't really see on the analyst side.
To be honest I have a hard time seeing it being worth it on the PA/friends & family scale.
Also, there is generally a $3,500 fee that is imposed when bank debt changes hands. Unless you are already a hitter, this is going to seriously eat into any economics.
Cheese, I think thats just for for JP loans. And they waive it if you dont trade away from them.
Most of the big banks do this. It's called an assignment fee. Some waive it but they aren't going to waive it for your PA trade.
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