What is the difference between a loan syndication and a loan securitization

What is the difference between a loan syndication and a loan securitization Introduction: The World of Loan Management Hello everyone, and welcome to today's video. When it comes to managing loans, financial institutions have various strategies in place. Two common methods are loan syndication and loan securitization. While they both involve the distribution of loans, they differ in their structure and purpose. In this video, we'll explore the nuances of these two practices, shedding light on their unique characteristics. Understanding Loan Syndication Loan syndication is a process where a group of lenders collectively provides funds to a borrower. This group, known as a syndicate, can include banks, financial institutions, or even individual investors. The primary objective of loan syndication is to spread the risk associated with a large loan among multiple lenders. This not only reduces the exposure of each lender but also allows them to participate in deals that may have been too substantial for them individually. In loan syndication, one lender, often referred to as the 'lead arranger,' takes the lead in structuring the deal and coordinating with the borrower. The other lenders, known as 'participants,' join the syndicate by taking on a portion of the loan. Once the loan is disbursed, each lender receives their share of the interest and principal payments, proportionate to their contribution.