Up-front fees on both pro rata tranches and institutional tranches reached their annual highs as fees on pro rata pieces jumped up to 5.2 basis points and fees on institutional pieces to 3.1 for March 2001. According to Portfolio Management Data, fees on pro rata tranches from the three months ending March 2000 were 2.9 basis points and fees on institutional tranches were 2.1 basis points for every one million dollars committed in March 2000.
Marc Auerbach, associate at PMD in New York, attributed the rise in fees on the pro rata front to the generally tough pro rata market borrowers have been facing this year. "We are continuing to see a tough pro rata market essentially due to consolidation," said Auerbach. He explained that syndicators now have a smaller pool of pro rata banks to sell their deals to, translating into higher pricing. On the institutional front, Auerbach attributed an increase in up-front fees to the influx of telecom deals hitting the market in the last couple of months.
