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Capital Markets

Blockchain Solutions for Syndicated Loans

Global capital markets handle billions of dollars in syndicated loans annually. The large size of these loans requires the involvement of many banks and financial entities, resulting in increased liability and cost from manual stakeholder coordination. Blockchain technology digitization and standardization provides solutions unique to the problems faced by the syndicated loans market.

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Streamline issuance, servicing and administration for agent banks

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The Problem

Execution and administration of syndicated loans is inefficient and costly, relying on a number of intermediaries, bespoke proprietary solutions, and legacy systems. Most deals are spearheaded by lead agent banks, which bear the liability of KYC, record management, servicing, and payments for lenders and secondary agents. Considerable manpower is required to ensure documentation work is performed correctly, taking time and increasing the risk for human error.

The Solution

Digital standardization on Codefi across lead agents, lenders, and secondary agents can drastically reduce the risk and manual efforts required to facilitate crucial components of a syndicated loan deal such as KYC, record and document management, servicing, and payments. A blockchain-based digital solution enables data integrity and consistency, security, and reduced cost.

Automate and facilitate amendment voting

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The Problem

Voting to amend the details of a syndicated loan deal requires the manual tracking and recording of stakeholder votes to arrive at a final decision. Once a vote is passed, documents must then be manually updated with new terms to ensure consistency across all syndicates.

The Solution

Codefi addresses two primary problems with syndicated loans voting by automating both the collection of votes and the editing of documentation. Amendment votes can be collected remotely and verified to confirm veracity without considerable manual time. Moreover, the results of a vote can set into motion a series of smart contracts that execute the affected terms of a syndicated loan, with the added benefit of an immutable time-stamp that can be viewed and verified by all parties.

Enhance document management and security

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The Problem

In any industry involving the participation of many stakeholders, document management is a persistent problem. Many identical and near-identical copies of documents exist across stakeholders, and the verification of the “truth” requires collaborative trust and consensus that can break down in larger or higher-stakes transactions. Data reconciliation requires considerable time and effort, and can often require the expensive involvement of lawyers and other third parties.

The Solution

Codefi’s document management system enables stakeholders to be assured of the latest version of a document as well as the immutable history of past versions. Its ‘single source of truth’ solution reduces the time and cost of data reconciliation across stakeholders, and decreases reliance on lawyers or third parties.

Activate near real-time clearing and settlement

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The Problem

In the existing syndicated loans market, settlement times can reach more than 20 days, creating considerable risk and exposure for the entities that comprise a loan syndicate. These entities must consequently shoulder the risk and associated liability cost of the gap between delivery and payment. Industry-wide, the result is increased fees and reduced profitability.

The Solution

Syndicated loans solutions built on top of blockchain technology enable near real-time settlement, effectively eliminating the inefficiencies, risk, and cost associated with long settlement times in today’s industry. Codefi enables these settlement solutions through secure digitization and tokenization of assets, accelerating the transfer of funds and thus optimizing the settlement of syndicated loans.

Work with ConsenSys to launch your blockchain solution for syndicated loans.

Benefits of Blockchain in Syndicated Loans

Process Efficiency

Smart contracts automate lead agent processes including KYC/AML, compliance, registry maintenance, payment settlement, transaction monitoring, and reporting.

Reduced Costs

Process automation reduces the need for manual operations and third party intermediaries, resulting in significant time- and cost-savings.

Lower Risks

Reduced settlement times, chain of title tracking, and cost of operations ensure stakeholders shoulder less risk than traditionally necessary, reducing associated costs.

Near Real-Time Settlement

Eliminating the gap between delivery and payment with near real-time settlement reduces liability and associated costs at all stages of loan syndication.

Data Accessibility

Network transparency and real-time information enable better coordination and execution across syndicated loan stakeholders.

Document Management

A blockchain-based document management system ensures a single and verifiable source of truth is known among all stakeholders.

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ConsenSys Codefi

The complete blockchain application suite for digital asset management

Codefi allows asset managers to create, issue, and manage the lifecycle of digital assets, associated markets, and digital financial instruments on permissioned blockchain networks.

Create financial products that are not currently securitized, including accounts payable, invoices, and supplier service contracts. Build on the connectivity between fully digitized assets to form new financial products and services.
Better meet investor and market demands by restructuring slow settling financial products, and customizing asset issuance directly for investor specifications.
Unlock liquidity by enabling fast and secure peer-to-peer asset transfers to expand secondary market opportunities and attract further investors to your network.
Access global markets, broaden your investor base, and amass more diversified assets under management with international distribution capabilities.
Achieve optimal operational efficiency and reduce costs with automated processes, and a distributed and mutualized market infrastructure.

Learn more about Codefi’s digital assets platform →

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In recent decades, capital market infrastructure has been subjected to complicated rules, red tape, and liability. The risks incur high operational costs, hindering companies by hurting the bottom line, and dissuading potential customers by raising the bar of entry. ConsenSys’ blockchain products address these pain points to facilitate rapid security issuance, transparent sales and trading, seamless digital asset management, and instant clearing and settlement.
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Ready to integrate blockchain into your asset management stack? Get Started Today.