Financing provided by one or multiple financing parties (usually banks) acting as underwriters, who will look to distribute all or a part of this financing to a syndicate of lenders.
The underwriter commits to the borrower that they will provide a specific (underwritten) amount of debt, therefore taking market or distribution risk. This means that, in case the underwriter is unable to place the debt with other financing parties, they will provide the full debt amount to the borrower using funds from their own balance sheet.
This type of financing is common in M&A or LBO situations, where the borrower requires full certainty on the amount of debt they will put in place (also referred to as financing provided on a “certain funds” basis).
Also known as Committed Financing
See also: Flex, Best Efforts Financing