More than 190 companies worldwide that received loans from failed Silicon Valley Bank could be on the hunt for new lenders.
(Bloomberg) — More than 190 companies worldwide that received loans from failed Silicon Valley Bank could be on the hunt for new lenders.
SVB committed to transactions worth more than $70 billion in the syndicated loan market, with the bulk of its participation on deals in the US, according to data compiled by Bloomberg. It was also involved in about 18 deals in Asia and 10 in Europe. SVB’s specific commitment on each is unknown.
Separately this morning several firms including PCI-PAL Plc and Trustpilot Group Plc said in regulatory filings that they have cash tied up in SVB accounts. UK-headquartered consumer self-care products maker Venture Life said SVB had participated in its revolving credit facility, which provides borrowings of up to £30 million ($36 million). It said SVB’s failure will have “no impact” on the RCF’s term, which isn’t due for renewal until June 2024.
In the case of a revolving credit facility that remains undrawn, a firm has the option to reduce the deal size by simply cutting out a particular bank’s share. One case in point was when several lenders dropped out of a revolving facility for Boeing Co. in 2020 at the height of the pandemic, and the transaction size was reduced by $100 million to $3.1 billion. In the 30 or so cases where SVB was the main loan administrator, borrowers can also ask other lenders in the group to take over the role.
Already this year SVB has joined about five loans including those for cloud-based solutions firm RingCentral Inc., software firm Ebix Inc., and technology solutions provider PTC Inc. A third of SVB’s loan participation has been in the technology sector.
In the US, a raft of shadow lenders are emerging to offer liquidity to the companies and funds whose cash has suddenly become trapped. Borrowers can also ask other arranging banks in a syndicate group to plug the gap left by SVB — a practice used when Russian lenders faced sanctions and after the collapse of Lehman Brothers.
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