Leveraged Finance & Credit
Rank these by expected recovery in a default and justify: first-lien TLB, second-lien loan, senior unsecured notes, subordinated mezz.
Model answer
Highest to lowest recovery: first-lien TLB > second-lien loan > senior unsecured notes > subordinated mezz. First lien has first claim on collateral and tops the waterfall (often quoted ~65-80% as an…
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