medium · Private Credit loan-structures-instruments
A Delayed-Draw Term Loan (DDTL) is typically 'fungible' with the initial Term Loan once it is drawn.
What does 'fungible' mean in this context?
- The DDTL carries a floating interest rate while the initial Term Loan is fixed for its full term
- The drawn DDTL and the initial Term Loan are treated as a single tranche with identical terms
- The undrawn DDTL can be used for any corporate purpose, including paying dividends to sponsors
- The DDTL must be fully repaid before any principal is due on the initial Term Loan
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