North American lenders find themselves in a Borrowers'
market where there is fierce competition for every quality middle
market financing out there. Historically, lenders have tried to
differentiate themselves from their competition by offering
aggressive pricing, reduced banking fees and flexible covenant
packages. Now, US and European lenders have gone one step further
and are marketing a new loan structure called the "unitranche
loan".
A unitranche loan is a lending facility where a single lender
offers the borrower a senior and a subordinated tranche of debt and
blends them into a single loan. Accordingly, rather than one lender
providing a senior debt tranche and a second lender providing a
separate subordinated debt tranche, one lender provides the
borrower with one single tranche of debt comprised of both senior
and subordinated debt. The pricing of a unitranche loan reflects
the unification of the senior/subordinate structure, and is priced
somewhere along
