Stretch Senior
Private Credit glossary · Loan Structures & Instruments
Definition
A hybrid loan structure where the senior secured facility stretches to include what would traditionally be a junior/mezzanine tranche, allowing the senior lender to provide a larger share of the total debt at a blended rate. Similar to unitranche but typically used in smaller, simpler deals.
Stretch Senior in plain English
Company debt normally comes in layers: the 'senior' layer gets paid back first and safest, while 'junior' or 'mezzanine' layers get paid later and charge higher interest for taking more risk. A stretch senior loan is when the senior lender 'stretches' to cover part of that riskier junior layer too, handing the borrower one bigger loan instead of forcing them to stitch two loans together. The borrower gets simplicity and a single blended interest rate; the lender earns a bit more for reaching further out on the risk ladder. It's the small-deal cousin of a unitranche loan, which does the same combining trick on larger, more complex deals.
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