Leveraged Finance & Credit
What are the main differences between bank debt (leveraged loans) and high-yield bonds?
Model answer
Bank/leveraged loans: typically senior secured, floating rate (SOFR + spread), can be prepaid at par with little/no call protection (often just 101 soft call for 6 months on a TLB repricing), shorter…
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More from Leveraged Finance & Credit
- Rank a standard LBO capital structure from cheapest to most expensive cost of capital, and explain why the ordering holds.
- A sponsor buys a company at 6.0x EBITDA of $200mm ($1.2bn EV). They want 4.0x total leverage. Sketch a plausible debt stack by tranche and the equity check.
- Why would a deal include both a TLB and senior notes rather than just maxing out the term loan?
- What does 'pro-rata' vs. 'institutional' tranche mean in a leveraged loan package?
- Explain the typical amortization profile of a TLB and what a '1% amort with bullet' means for the lender.
- What is an excess cash flow (ECF) sweep, and how does the sweep percentage typically step down?
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