Bank Debt in Brokerage Account

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.