Fungible term loan

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

A fungible term loan is a new tranche of a term loan written on identical terms to an existing one — the same maturity, margin and documents and, where the loan trades, the same identifier — so that the two become one interchangeable class of debt. Fungibility matters when a borrower adds to a loan that investors already hold: if the new money differs in any term, it sits as a separate tranche that votes, prices and trades on its own. A non-fungible add-on is not a technicality; it is a second loan with its own lenders and its own terms.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.