medium · Debt Capital Markets primary-issuance-syndication
In the context of a syndicated loan, what is the function of the 'price flex' clause during the bookbuilding process?
- It lets investors upgrade the seniority ranking of their loan claim once the credit facility has been funded.
- It allows the borrower to reduce the committed loan amount whenever benchmark interest rates move higher.
- It permits the lead banks to adjust the interest margin or OID to clear the market based on investor demand.
- It mandates an automatic conversion of the term loan into a high-yield bond upon any financial covenant breach.
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