ABSTRACT
Multicreditor debt instruments such as bonds and syndicated bank loans are uncommon legal arrangements. In most contracts, the parties know each other’s identity beforehand, and they make a conscious decision to enter into a legal relationship. In a multicreditor debt instrument, the borrower’s identity is of course known by each investor, but what the investors do not know – what they often never know – is the identity of each other. Bond investors are like the patrons in a theatre audience: each one has decided to see a particular play on a particular night, but none has any idea who he or she will be seeing it with. If you wish to carry the analogy further, the tradable nature of bonds means that fellow patrons are constantly leaving and entering the theatre throughout the performance.
