Unitranche

A single loan, usually from one direct lender, replacing separate senior and subordinated debt at a blended rate between the two. The borrower pays more than for senior debt alone in return for speed and simplicity.

Where you will meet it

Unitranche appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Distinguish mezzanine financing from unitranche lending and the circumstances in which a sponsor would pick each
  CFA Level III · Private Markets Pathway

  “Unitranche merges senior and junior debt into one loan with a blended rate and one set of documents, usually from a direct lender, and closes quickly and with certainty.”

• Weigh risk and return across private credit strategies, and set them against other private market assets, in a strategic allocation
  CFA Level III · Private Markets Pathway

  “Private credit runs from senior direct lending, with floating-rate contractual income and the lowest risk, through unitranche, mezzanine and venture debt to distressed debt, which behaves like equity.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with U · Glossary