What are lead arrangers?

Loan syndication starts with the borrower awarding the mandate to one or more arrangers to syndicate the financing.  The lead arranger is a commercial or investment bank that is mandated by the borrower to organize and syndicate a financing on the borrower’s behalf, on the basis of the negotiated terms and conditions set out in the term sheet and mandate letter.

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A joint lead arranger (JLA) is a commercial or investment bank that is awarded the lead arranger mandate by the borrower together with one or more other lead arrangers to arrange the financing and manage the syndicate.  They usually do the bookrunning in different markets and share equally the underwriting commitments, underwriting fee and league table status.  Joint mandates are awarded to maximize the chance of a successful syndication and to reward more than one bank with lead arranger status and arrangement underwriting fees.

Under the second option[...], Chase and two other banks would share a joint mandate and a joint underwriting commitment.

– Esty, 2001

The lead arranger is responsible for negotiating the key terms and facility covenants and assigning the syndicate roles and titles.  Also, as bookrunner, a lead arranger manages the syndication process, determines the loan pricing, tiers and titles (brackets) offered, allocation to each lender, and the final composition of the syndicate.