SYNDICATED LOANS AND THE ADMINISTRATIVE AND COLLATERAL AGENCIES IN THE REGULATION OF THE CHILEAN CAPITAL MARKET

Abstract

The financial markets have developed a variety of methods to cater for borrowers with substantial financing requirements, while simultaneously devising mechanisms for risk diversification. A key evolution was the development of the syndicated loans market. Its emergence represents a natural response to the increasingly complex financing needs of large borrowers. It permits coordinated action by financial institutions who wish to maintain independent borrowings and limit their exposure by diluting the risk. The syndicated loan, a result of the freedom of contract, is not currently recognized by our legal system other than by the indirect regulation of the administrative and collateral agencies, as governed by Law No. 20,190, of June 5th, 2007. On the basis of these rules and commercial practice, this article seeks to shed some light on the features and functionality of syndicated loans in the context of the Chilean law.