AGENTED CREDIT Meaning and
Definition
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Agented credit refers to a type of financial arrangement where a group of banks or financial institutions collectively provide credit or financing to a borrower. In this arrangement, one of the banks acts as the lead or agent bank, responsible for organizing and coordinating the credit facility on behalf of all the participating banks. The agent bank is typically responsible for negotiating the terms and conditions of the credit agreement, as well as administering the loan throughout its duration.
Agented credit is commonly used in large-scale financing transactions, such as project finance, syndicated loans, or acquisition financing, where the credit requirements exceed the capacity of a single bank. The borrower benefits from agented credit by gaining access to a larger pool of funds and diversifying risk among multiple lenders.
The agent bank plays a crucial role in agented credit by acting as an intermediary between the borrower and the lenders. It is responsible for distributing funds to the borrower, collecting principal and interest payments, and ensuring compliance with the terms of the credit agreement. Additionally, the agent bank may act as a communication channel between the borrower and the participating banks, disseminating information or amendments to the credit facility.
Overall, agented credit is a collaborative form of financing that allows multiple banks to collectively provide credit to a borrower. This arrangement helps facilitate large-scale transactions and provides a more efficient and streamlined approach to credit provision.
Etymology of AGENTED CREDIT
The term "agented credit" is a combination of two words - "agented" and "credit". Here is a breakdown of their etymology:
1. Agented: The word "agented" is the past participle form of the verb "agent", which means to act on behalf of someone or something. It derives from the Latin word "agens" (agentis), which is the present participle form of the verb "agere" (to do, to act). In English, "agent" entered the language in the early 17th century, originally referring to someone who represents another person in legal or business matters.
2. Credit: The term "credit" takes its origins from the Latin word "creditum" (loan, trust), which is the neuter past participle form of the verb "credere" (to believe, to trust).
