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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Stretch senior

What is stretch senior debt in development or acquisition finance?

ONE OF 366 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Stretch senior is a single senior loan that lends further into a project or business than the lender's usual senior limit, covering part of what would otherwise take a mezzanine lender. The borrower gets one lender, one set of documents and no intercreditor agreement, at a margin between senior and mezzanine pricing. The lender holds the higher-risk slice itself, with first-ranking security, so it reads the file as if part of its loan were mezzanine: thinner equity beneath it, less room for a cost overrun or a fall in value, and more of the outcome resting on the exit.

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.

// WHAT IT IS NOT

Mezzanine finance is a separate loan ranking behind the senior lender under an intercreditor agreement; stretch senior is one loan with one ranking that reaches the same higher leverage inside the senior position.

// WORKED IN

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