The days of the clubby syndicated loans market are dead, or at least rapidly dying. These days, arrangers and agents increasingly have to deal with different types of investor from the traditional banks. Some of these investors, such as hedge funds, will be so-called public side investors, who will only want limited information about a borrower group. And there lies the rub. Public side and private side refer to the two sides of a Chinese wall (or information barrier) in an investment institution. People on the public side of the wall deal in regulated investments such as bonds, equities and derivatives, which are subject to insider dealing legislation. To ensure they can never be accused of trading on the basis of inside information, public side staff must only have access to public information – leaving any private information firmly on the other side of the information barrier.
Arrangers and agents of syndicated loans are on the ‘private’ side. They receive far more information about their borrowers than is made available to their public side colleagues. Some or all of this non-public information may be ‘inside information’.
