16. Secondary pricing tends to be higher than primary pricing for a number of reasons including: there is less or no relationship pressure to buy in the secondary market thus borrowers cannot drive a harder bargain; the distressed state of the Far Eastern banks and their desire to reduce assets led to substantial discounting of loan assets; lead arrangers of transactions have a far larger front end fee than the lower level lenders and can use a part of this to subsidise further sell-down of positions and achieve enhanced returns on their final hold.
17. Annex 2 is a schedule showing the indicative secondary market yields for a number of facilities that would have been used as a benchmark for a facility for LCR launched in the first two months of 1999. The government guaranteed or partially supported facilities had a yield around their margin. Also quoted are indicative yields for the Railtrack facility, which had an average premium of 34% to its original margin. It is worth noting that the remaining maturities for all these transactions are considerably shorter than those LCR required.