What is 'Unitranche Debt'

Unitranche debt is 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.

BREAKING DOWN '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. Subordinated Debt

    A loan (or security) that ranks below other loans (or securities) ...
  2. Senior Debt

    Borrowed money that a company must repay first if it goes out ...
  3. Subordinate Financing

    Debt financing that is ranked behind that held by secured lenders ...
  4. Debt Instrument

    A paper or electronic obligation that enables the issuing party ...
  5. Convertible Subordinate Note

    A short-term debt security that can be changed into common stock. ...
  6. Secured Debt

    Debt backed or secured by collateral to reduce the risk associated ...
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RELATED FAQS
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