medium · Private Equity
Which characteristic typically distinguishes a 'Term Loan A' (TLA) from a 'Term Loan B' (TLB) in a leveraged buyout capital structure?
- TLA is usually amortizing and held by banks, while TLB is a bullet loan held by institutional investors
- TLB is always senior in priority to TLA within the collateral security package pledged to lenders.
- TLA typically carries a meaningfully higher interest rate margin than TLB to compensate for its greater risk.
- TLA is typically structured as 'cov-lite' debt, while the institutional TLB tranche keeps maintenance covenants.
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