CFO: Middle Market Embraces Unitranche Loans
CFO.com reports middle-market companies and leveraged buyout firms are returning to the recent past with a hybrid loan structure that simplifies the use of subordinated debt and may lower firms’ cost of capital.
First created in 2005, a unitranche facility is a faster way to borrow than the traditional structure that uses senior and mezzanine debt and which requires the direct involvement of multiple lenders. In a unitranche facility, a single lender, usually a specialist in business development financing, provides the entire credit and works with the borrower. Then that lender slices up, or “tranches,” the loan for other investors.
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