A blind eye for inconveniences
I would like to think that most of the bankers I know pore over the minutiae of deal documents, but there are always exceptions to the rule.
I recently met an ambitious young loans banker at Captain’s Bar, the classic meeting place of old and new, rich and a bit richer, sozzled and firmly-on-the-way. He was not happy, bemoaning a transaction that he was dying to participate in but couldn’t get internal approval for. The reason was simple — the borrower planned to use the money for projects in volatile and controversial countries including Iraq, Sudan and Turkey.
But the chap wasn’t upset about his bank’s strict approval process. Instead he blamed the deal’s bookrunners for mentioning these countries in the loan documents. According to him, a ‘general corporate purposes’ note would have sufficed.
What a breathtaking commitment to concision! This banker was clearly on a Hemingwayesque bent, determined that only the smallest number of words are used to maximum effect. He was a financial Raymond Carver, a cummings of covenants. Either that, or he was hoping to get away with participating in deals he really should have stayed well away from.
I did wonder whether removing the list of countries from the loan documentation would really have made all that much difference. Wouldn’t his bank’s credit committee have looked into the specifics of the company? Wouldn’t a simple bit of due diligence have thrown up the fact that it was operating in war-torn countries with high credit risk?
He shrugged. It didn’t matter anyway, he said. He would just wait and buy the deal in the secondary market.