Tender Panel

What Is a Tender Panel?

A tender panel alludes to a method of debt financing via a revolving underwriting facility (RUF). "Tender panel" is a term principally used in Europe and not as common in the U.S. The U.S. equivalent would be a banking syndicate.

Tender panels are gatherings of commercial banks and investment banks that are dispatched by a borrower. They are framed to assist with financing projects by requesting bids from different lenders on a best-endeavors basis.

Figuring out a Tender Panel

Tender panels are utilized to sell medium-term euro notes to large numbers of investors, subsequently successfully spreading the risk of those notes across a large number of participating lenders. According to the point of view of the borrower, tender panels can permit access to a lot larger pool of expected lenders than would somehow be conceivable. In that capacity, they are frequently utilized by institutions, for example, universities, who want a single point of access to the capital markets.

According to the viewpoint of the banks in question, the tender panel really addresses a selling agent and a source of new business. Critically, tender panels permit the banks required to acquire the right, however not the obligation, to broaden new corporate loans.

On the off chance that a bank has a lot of capital and a craving to loan, it can make a bid through the tender panel. In the event that, notwithstanding, the bank is encountering lean times, it can stay on the tender panel while swearing off specific rounds of raising support.

Illustration of a Tender Panel

Tender panels are a famous method for raising short-and medium-term financing. To illustrate, consider a scenario where a company wishes to organize a short-term loan of 100,000 euros (EUR). The bank orchestrating the loan gathers a syndicate of different institutions that by and large consent to give the loan amount. At this stage, a maximum interest rate is likewise agreed upon.

Be that as it may, the specific interest rate paid by the borrower will rely upon the second stage of gathering pledges. In that stage, the organizing bank gathers a tender panel of different institutions that consent to add a capital to the funds initially pledged by the individuals from the banking syndicate. The borrower is then free to acknowledge loans from whichever institutions on the tender panel will offer the most minimal interest rates.

If, notwithstanding, none of the tender panel banks can offer an interest rate that is acceptable to the borrower, then the company will depend on the initial banking syndicate all things considered. In this manner, according to the viewpoint of the borrower, tender panels are a method for acquiring competitive interest rates while as yet being guaranteed of getting financing from the banking syndicate on the off chance that they are not able to find more competitive rates somewhere else.

Features

• Borrowers are free to opt for the cheapest financing offered by the tender panel; if not, they can continue with the best available offer from the banking syndicate.
• It includes a two-step gathering pledges process in which a syndicate of banks requests interested gatherings to make bids on the corporate loans required by the borrower.
• A tender panel is a method of raising money utilizing short-and medium-term debt instruments.