No front-running provision

In the context of a syndicated loan (www.practicallaw.com/0-107-7357), a provision often included in a commitment letter (www.practicallaw.com/8-373-0959) (although it may form a separate letter in its own right) preventing an arranger (www.practicallaw.com/4-107-6431) or underwriter (www.practicallaw.com/1-107-7446) from making a private deal with a lender that would encourage the lender to invest in the secondary market (www.practicallaw.com/8-107-7216) instead of joining the syndicate.

The provision is particularly important if the loan is underwritten as the process of front-running may distort an arranger's or bookrunner's (www.practicallaw.com/3-107-6506) primary market (www.practicallaw.com/6-107-7043) and adversely affect syndication leaving the underwriter with additional debt to underwrite.

The prohibition on front-running is often extended to each of the primary syndicate lenders as a similar provision may be included in their confidentiality letters which each lender must sign before it receives the information memorandum (www.practicallaw.com/3-382-4309).

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