Can someone shed some light on the difference between TLA vs. TLB? It seems like many company 10-k don't specify whether it's a TLA or TLB, rather just say term loan.
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TLAs are syndicated amongst banks, TLBs with institutional investors. TLAs typically have tighter pricing, more restrictive covenants and varying/bespoke amortization schedules. TLBs have weaker pricing, looser covenants and typically amortize at 1%.
If you can’t tell from the 10-k and don’t have Bloomberg or something similar, I would just look for the press release from when it was issued.
That would be a nightmare. I can't believe they don't indicate that and it seems like the norm. My fellow associate told me that if the loan have a 1% amortization then it's usually a TLB. Does anyone have shortcuts on how to figure out whether a term loan is a TLB or TLA on the 10k?
Agree with @EnergyIBK. Also, usually TLAs are 5 years, while TLBs are 7 years. TLAs are not too liquid since banks usually hold them while TLBs are relatively liquid than TLA. If the 10K doesn't tell you then I would use Bloomberg or LCD comps. But as mentioned above if its a 7 year TL with 1% amort its surely TLB.
Ways to differentiate between tlb and tla.
Go with what your associate said, if it amortizes at 1% it's almost certainly a term loan b.
Other ways
Ratings: tlbs usually are rated by s&p and Moody's. To usually unrated.
Maturity: tlb usually matures in 7 years and almost always matures AFTER the revolver. To and a cash flow revolver (together also referred to as a pro rata loan) will have simultaneous maturities.
Security. If it is a tlb and and structure it will have "swapping seconds". I.e. able will have first priority lien on it's collateral pool (inventory and receivables) and a second lien on the tlb collateral pool (all other assets and stock of the company). The tlb will have a first lien on it's collateral pool and a second on the abl collateral. Term loan a and it's revolver usually share the same pool of collateral.
Covenants: if a loan (NOT A BOND) has no leverage covenant (i.e. keep leverage below 4x) it's a covenant lite loan and is a term loan b.
For some Reason term loan A autocorrected to "to".
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