Question about Senior Debt

Question

https://www.spglobal.com/marketintelligence/en/pa…

I was watching the videos in the above LCD Primer, and the guy talks about Senior Secured Loans. He said that Senior Secured Loans are only issued by non-investment grade companies. This made me realize that investment-grade companies do not use Senior Debt.

So what kind of debt do investment-grade companies use? Do they only issue corporate bonds? They must be able to obtain term loans from banks, correct? If so, how are term loans different from Senior Secured Loans and why are they called different things?

bankermcgee420 · Accepted Answer

Can't think of a situation where I've seen an IG company do a secured deal (but I'm sure it's happened before nothing is impossible). Don't think just because you do a secured deal=lower interest rate. The secured deal is more for banks that will want it with certain non-IG names to be structurally superior to other lenders (banks want to make sure with more risky loans that they will be first in the cap structure), it's not really tied to pricing.

bankermcgee420 · Answer

I ended up lateralling externally to another bank. Definitely easier to do it internally especially if you've gotten good reviews or have a report with a certain coverage team. It just wasn't a good timing to move internally because of things going on at my previous bank and internal hires were on hold. So networked with people at other banks and started getting myself in processes. Funny part is the job I took ended up being at a BB bank where I did zero networking and just applied online.

bankermcgee420 · Answer

I spent 2 years in corporate banking before lateralling to my current IB gig so that's where I got familiar with and knowledge about debt. I personally think it's helpful to know as financing considerations and a buyers access to financing alternatives is important to think about in regards to M&A I think. But I would say most of the other analysts in coverage have much less knowledge around the details of debt and they're understanding of it is at a much higher level.

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Question about Senior Debt

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Question about Senior Debt

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