Unitranche Debt

AAA

DEFINITION of 'Unitranche Debt'

A type of debt that combines senior and subordinated debt into one debt instrument; it is usually used to facilitate a leveraged buyout. The borrower would pay one interest rate to one lender, and the rate would usually fall between the rate for senior debt and subordinated notes. The unitranche debt instrument was created to simplify debt structure and accelerate the acquisition process.

INVESTOPEDIA EXPLAINS 'Unitranche Debt'

Unitranche lending has its detractors because the loan is often split between secured and unsecured instruments. The interest rate benefit of a secured debt instrument is at least partially obscured by the increased risk attached to the unsecured portion of the instrument.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Leveraged Loan

    Loans extended to companies or individuals that already have ...
  3. Asset-Backed Security - ABS

    A financial security backed by a loan, lease or receivables against ...
  4. Leveraged Buyout - LBO

    The acquisition of another company using a significant amount ...
  5. Tranches

    A piece, portion or slice of a deal or structured financing. ...
  6. Leveraged Benefits

    The use โ€“ by a business owner or professional practitioner โ€“ ...
RELATED FAQS
  1. Does shopping for the best interest rate affect my credit score?

    Shopping for interest rates does not necessarily affect a person's credit score. When a borrower submits an application to ... Read Full Answer >>
  2. How often is interest compounded?

    Interest can be compounded on any given frequency schedule. Common interest compounding time frames are daily, monthly, semi-annually ... Read Full Answer >>
  3. What are the pros and cons of getting installment credit to pay off your revolving ...

    Whether it is to finance big-ticket items, cover unplanned emergency expenses or provide a monetary cushion when cash flow ... Read Full Answer >>
  4. What does it mean when interest "accrues daily?"

    In financial terminology, "accrues" means the same thing as "accumulates." Interest is considered accrued when it is added ... Read Full Answer >>
  5. When did people first start using collateral to secure loans?

    The history of lending, particularly non-money lending, is not well documented. It is widely believed among financial historians ... Read Full Answer >>
  6. How can I tell if a loan uses simple or compound interest?

    When analyzing the terms of a loan, it is important to consider more than the interest rate. Two loans can have identical ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Understanding Leveraged Buyouts

    LBOs are often presented as predatory by the media, but it really depends on which side of the deal you're on.
  2. Entrepreneurship

    Why Successful Business Owners Sell Out

    Learn the motives that drive companies into the arms of an acquirer.
  3. Mutual Funds & ETFs

    Could Your Company Be A Target For Activist Investors?

    Find out why certain companies are targeted by these investors.
  4. Retirement

    How The Big Boys Buy

    Learn what those in-the-know look for when acquiring a company.
  5. Options & Futures

    Pinpoint Takeovers First

    Use these seven steps to discover a takeover before the rest of the market catches on.
  6. Credit & Loans

    The Pros & Cons Of Personal Loans vs. Credit Cards

    One is not like the other. We help you decide where to borrow money from.
  7. Entrepreneurship

    What Is Microlending And How Does It Work?

    Microlending can produce great return on investment for the lender while benefiting borrowers who wouldn't otherwise secure funding.
  8. Credit & Loans

    Borrowing From LendUp: Better Than A Payday Loan?

    A new alternative to conventional payday loans is being offered in 16 states. How much better for consumers is LendUp really? Read on for details.
  9. Savings

    Why Do Credit Cards Expire?

    Credit cards expire for more reasons than you could imagine โ€“ including, so you don't forget you have the card.
  10. Trading Strategies

    Eyeing a Loan? Consider Skipping the Banks

    Peer-to-peer lending platforms, such as Lending Tree, Lending Club and Prosper, offer borrowers newfound leverage. Here's a look.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center