What is a senior secured loan facility?

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. The borrower is the company itself, not a bank.

What are the four types of secured loans?

Types of Secured Loans

  • Vehicle loans.
  • Mortgage loans.
  • Share-secured or savings-secured Loans.
  • Secured credit cards.
  • Secured lines of credit.
  • Car title loans.
  • Pawnshop loans.
  • Life insurance loans.

What is a senior financing facility?

Senior bank loans take priority over all of the other debt obligations of a borrower. In the event of a bankruptcy, senior bank loans receive payment before other creditors, preferred stockholders, and common stockholders, when the assets of the borrower are sold off.

Are senior loans risky?

Not Risk-Free

In a nutshell, Senior loans are riskier than investment-grade corporate bonds but slightly less risky than high-yield bonds. It’s important to keep in mind that valuations in this market segment can change quickly. … In other words, just because the bonds are “senior” doesn’t mean they aren’t volatile.

What is first lien senior secured?

First Lien Senior Secured Loan means a Bank Loan (i) that is not (and cannot by its terms become) subordinate in right of payment to any other obligation of the obligor of such loan, (ii) that is secured by a valid first priority perfected security interest or lien to or on specified collateral securing the obligor’s …

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Which is an example of a secured loan?

Examples of Secured Loans:

Mortgage – A mortgage is a loan to pay for a home. Your monthly mortgage payments will consist of the principal and interest, plus taxes and insurance. Home Equity Line of Credit – A home equity loan or line of credit (HELOC) allows you to borrow money using your home’s equity as collateral.

What are two examples of items that could be used as collateral for a secured loan?

Types of Collateral You Can Use

  • Cash in a savings account.
  • Cash in a certificate of deposit (CD) account.
  • Car.
  • Boat.
  • Home.
  • Stocks.
  • Bonds.
  • Insurance policy.

Are bonds senior debt?

Debt Repayment Terms

Loans and bonds can be issued as senior debt or subordinated debt. Senior debt is repaid first if the borrower encounters a default or liquidation.

What is senior leverage?

Senior Leverage Ratio means, at any date of determination, the ratio of Consolidated Senior Indebtedness on such date to Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower most recently ended as of such date.

What is the senior loan market?

Senior loans are debt securities typically used by companies to finance their operations, support business expansion, and refinance existing debt. They are known as “senior” loans due to their position atop of a borrowing company’s capital structure.

Are term loans senior secured?

Senior Secured Loans (SSL), commonly referred to as bank loans or floating rate loans are short term debt obligations issued by banks and private corporations. These loans are typically made to companies that have below-investment grade credit ratings.

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Are bank loans considered high yield?

High yield bonds and bank loans, collectively known as leveraged finance, are two sectors of the fixed income market that are converging as a single non investment grade asset class. … The paper then turns to the risk and return benefits that a flexible high yield/bank loan strategy has the potential to provide.