Best answer: Is second lien term loan senior debt?

Is second lien considered senior debt?

Second lien finance or second lien debt is a type of secured debt which may be characterised as: Ranking equally with senior debt as to payment prior to acceleration. Sharing the same security package as the senior debt, in terms of the assets over which security is granted.

Is second lien senior?

The vast majority of all second lien loans are senior secured obligations of the borrower. Second lien loans differ from both unsecured debt and subordinated debt.

What is senior lien debt?

Senior debt is a company’s first tier of liabilities, typically secured by a lien against some type of collateral. Senior debt is secured by a business for a set interest rate and time period. The company provides regular principal and interest payments to lenders based on a preset schedule.

Is second lien subordinated debt?

Second lien loans differ from mezzanine financing, since second lien loans are lien subordinated, while mezzanine financing is debt subordinated. This means senior lien holders have priority if the borrower defaults or if the collateral for the loan is sold or claims are otherwise impaired.

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Does second lien debt amortization?

Second lien debt can be subject to an amortization schedule, but there is usually a significant bullet payment at maturity, and the maturity of the second lien debt is also likely to be later than the maturity of the senior debt.

What is senior secured second lien?

Second Lien Senior Secured Debt means Debt of the Credit Parties secured by Liens on the Collateral on a junior basis pursuant to intercreditor arrangements, which shall contain customary market terms and conditions for second lien financings and otherwise be in form and substance reasonably satisfactory to the …

What is the difference between 1st and 2nd lien?

A second lien is a loan taken out that uses your home as collateral, even though you already have a mortgage that is secured by the property. It comes second to the first lien, which is the initial mortgage you took out to purchase the home.

Is first lien the same as senior debt?

Senior debt is often secured by collateral on which the lender has put in place a first lien. Usually this covers all the assets of a corporation and is often used for revolving credit lines. It is the debt that has priority for repayment in a liquidation.

How does a second-lien work?

A second mortgage or junior-lien is a loan you take out using your house as collateral while you still have another loan secured by your house. … The term “second” means that if you can no longer pay your mortgages and your home is sold to pay off the debts, this loan is paid off second.

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Is mezzanine debt second-lien?

Unlike second-lien loans, mezzanine debt is a true ‘silent second’ debt behind the senior loan. Second-lien or tranche B loans(1) emerged in the early years of this decade. The growth in second-lien loans corresponds to a dramatic expansion of private equity funds and buy-out transactions in the past five years.

What is included in senior debt?

Any debt with higher priority over other forms of debt is considered senior debt. For example, a company has debt A that totals $1 million and debt B that totals $500,000. Debt A is senior debt, and debt B is subordinated debt. If the company files for bankruptcy, it must liquidate all of its assets to repay the debt.

What is a senior secured debt?

Senior secured loans are debt obligations generally issued by non-investment grade businesses. These loans are usually “secured” by a company’s assets, and are typically used to fund a company’s growth or cover general operating expenses.