The security agent

Published by a ÀÏ˾»úÎçÒ¹¸£Àû Banking & Finance expert
Practice notes

The security agent

Published by a ÀÏ˾»úÎçÒ¹¸£Àû Banking & Finance expert

Practice notes
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What is a security agent?

The role of the security agent is very important in syndicated transactions. In a syndicated loan transaction, the security agent (also known as the ‘security trustee’) is the party that holds the transaction security on trust for the lenders and any other secured creditors, such as hedging counterparties. Despite being more commonly referred to as a security agent, the nature of the role is not one of agency but one of trusteeship.

The use of a trust structure to hold the transaction security has significant advantages in syndicated lending where the group of creditors typically changes over time as and when lenders transfer their loans to new lenders (see Practice Note: Introductory guide to loan transfers). The key advantages are as follows:

  1. •

    the trust structure avoids the need for security to be granted separately to each of the creditors, which can be expensive and time consuming, and

  2. •

    the security is vested in the security trustee for the benefit of the existing secured creditors and any parties that become secured creditors in the future.

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Jurisdiction(s):
United Kingdom
Key definition:
Security agent definition
What does Security agent mean?

Similar to a security trustee, appointed to act on behalf of underlying creditors.

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