A leveraged loan is an organized loan lent to a below-investment-grade borrower. There are multiple lenders but it is one loan with one set of terms.
Typically:
• Leveraged loans are floating rate instruments based on a spread over LIBOR
• Loans are senior secured loans meaning the loans are at the top of the borrower’s capital structure
• Borrowers are fall on the relatively asset rich side
• Loans are syndicated to ten or more nonbank investors or banks
Below-investment-grade borrower= below BBB-/Baa3
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