Glossary
Credit and risk
What is hung deal?
A committed financing the banks can't sell at an acceptable price.
The bank funds it and holds it, or sells at a discount. Hung deals tie up capital that the desk needs for new business.
A worked example
A bank underwrites a $1bn loan at 99 and then the market sells off. Investors will only pay 94, so the bank either sells at a $50m loss or keeps the loan on its balance sheet and marks it down.
Where it catches you in the game
- A book that won't clear inside flex and fee goes to the hung deal room: sell, hold or ask the sponsor.
It comes up most on the leveraged finance desk.
Related terms
Learn it by using it
Definitions stick once they've cost you money. Take a seat, make three calls a year and watch what hung deal does to your returns.