What's the difference between privately placed HY bonds and Mezzanine?
...
...
+187 | Is my life over after not getting GS? | 36 | 1d | |
+98 | How to stop feeling like shit for not making it in IB? | 40 | 34m | |
+59 | Updated LA Banking Scene (2024) | 42 | 1h | |
+47 | Military Officer vs. IB analyst | 18 | 2s | |
+45 | Why Is It Called Investment Banking? | 17 | 1d | |
+41 | If Tik Tok is forced to sell, what banks do you think would be involved in the deal? | 27 | 2s | |
+38 | best groups for energy transition? | 33 | 3h | |
+31 | UBS Actual Buyside Exits 2024 Post-Integration | 9 | 1d | |
+30 | Very ridiculous interview feedback | 15 | 1d | |
+30 | Got RBC offer but I have cold feet accepting. | 39 | 7h |
Career Resources
Are you talking about Reg 144A bonds?
yeah. the difference between those (which are again privately placed) and privately placed mezz. Also is (Senior) Term Loan B same thing as a Second Lien loan?
It's nothing like Mezz. The only difference for Reg 144A bonds is that there is no public reporting. Everything else is exactly like a publicly registered bond. Also, the common notation is "private for life".
For your second question, Second Lien is referring to the type of security the loan has. Term Loan Bs can be second lien, first lien, unsecured, etc.
right. but TLB cannot be first lien if you already have a TLA, which by definition is a first lien loan (to have a 2nd lien loan, you need to have a 1st lien loan). Can you have a TLB without TLA? if you can have it, then I assume a TLB could be 1st lien. And whats the deal about unsecured? Term Loans are senior secured (with either 1st lien or 2nd lien on them) - I've never heard of a (senior) term loan that is unsecured. As far as I know, the only debt that is unsecured is subordinated debt which could be either mezz or HY.
Term Loan B can either be held by the underwriting bank or sold down to institutions. Biggest difference between TLA and TLB is that term loan B amorts slower. Slower amort equals larger average debt balance which translates into more interest income for institutional investors.
tla is the shit banks like. tlb is more hedge fund and toher shit. tlb has less amort.
I would also add that there are prepayment penalties, because as you mentioned the institutional investors want the yield versus in a TLA structure the banks would actually prefer that the loan is repaid early.
Not trying to be rude, but based on your comments thus far the fact that you have never heard of something means very little. You are extremely confused. HY notes and TLb can basically be any combination of security and senority that you can think of. 1st lien, 2nd lien, unsecured, senior, sub, etc.
FYI, TLAs are not always secured and of course you can have a TLB without a TLA
Forgot to mention you need to look up the term pari passu.
Still an undergrad so take the below with a pinch of salt.
As far as I know, most leveraged transactions pre-08 were senior secured and included an amortising term loan A (TLA), and one or two bullet repayment term loans B and C (TLB and TLC). All tranches usually ranked pari passu i.e. TLA usually did not have a higher priority than TLB. The different risk-rewards come about as a result of the different tenors and payment schedules. TLA usually matures first, followed by TLB and then TLC. Also, as TLA is armotising, it has a lower duration than TLB and TLC. Banks would normally fund TLA, while TLBs and TLCs would be funded by credit funds, insurance companies, CLOs etc. TLA would typically be priced at libor+400, TLB 50-100bps wider, and TLCs even wider. Where revolvers existed as well, these usually ranked pari passu with the term loans.
As firebi mentioned though, loans can be structured in different ways and there's no reason why a syndicated loan facility couldn't be structured with TLB being 2nd lien behind TLA, or the whole facility being unsecured (though I've never heard of this actually happening, but it's not impossible from a legal standpoint).
Expedita eum et quia reprehenderit sed velit. Est laboriosam sint ducimus sed ipsam qui. Error et voluptate et odio.
Quod quae eos doloremque laborum quidem id impedit. Odit et nisi eaque esse delectus nulla voluptas. Possimus reprehenderit culpa quaerat praesentium dolorum omnis quaerat.
Sequi eos atque et nostrum error eos quis. Asperiores animi in enim placeat totam. Perspiciatis aut impedit harum voluptas. Recusandae reiciendis aut quaerat distinctio.
Est consequuntur nam magnam ut. Totam neque tempora occaecati beatae veritatis animi. Aliquam ut est sed vero beatae debitis sed.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...