Why sell a participation in a syndicated loan?

A lender under a syndicated loan may decide to sell its commitment in a facility for one 

or more of the following reasons: 

6.1.1  Realising Capital: if the loan is a long-term facility, a lender may need to sell its share of the commitment to realise capital or take advantage of new lending opportunities; 

6.1.2  Risk/Portfolio Management: a lender may consider that its loan portfolio is weighted with too much emphasis on a particular type of borrower or Loan or may wish to alter the yield dynamics of its loan portfolio.  By selling its commitment in this loan, it may lend elsewhere, thus diversifying its portfolio; 

6.1.3  Regulatory Capital Requirements: a bank's ability to lend is subject to both internal and external requirements to retain a certain percentage of its capital as cover for its existing loan obligations.  These are known as "Regulatory Capital Requirements"; and Mandate from Borrower to Arranger Syndication  Signing/Drawdown Term Sheet Mandate Letter Invitation Information Memorandum Draft Facility Agreement Allocations of Participations Facility Agreement Fee Letters Conditions Precedent Mandate from Borrower to Arranger Signing/Drawdown  Syndication  Term Sheet Mandate Letter Facility Agreement (signed by Arrangers only) Fee Letters Conditions Precedent Invitation Information  emorandumAllocations of Participations Global Transfer Certificate/ Syndication Agreement  

6.1.4  Crystallise a loss: the lender might decide to sell its commitment if the borrower runs into difficulties - specialists dealing in distressed debts provide a market for such loans. However, before the lender can go ahead and transfer its participation in a syndicated loan, it must consider the implications of the methods of transfer available to it under the Syndicated Loan Agreement.