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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Unitranche

What is a unitranche loan, and how is it split between lenders?

ONE OF 416 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A unitranche is a single term loan that replaces separate senior and junior debt, with one set of documents, one security package and one blended margin, usually provided by one or a few private credit funds to a sponsor-backed business, often beside a small bank revolving facility ranking ahead. Where several lenders share it, an agreement among lenders, which the borrower may not sign, can split it into first-out and last-out pieces with different margins and priority. On a US$100m unitranche at a 6.0% margin, a first-out lender taking US$30m at 3.5% leaves the last-out lenders about 7.1%.

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.

// THE FULL PAGE

Unitranche: a Worked Example →

One loan to the borrower, two queues behind the door.

// WHAT IT IS NOT

Stretch senior is one lender's senior loan reaching further than usual; a unitranche replaces a whole senior and junior structure in one loan, and may be divided among its lenders by a separate agreement. Mezzanine finance is a separate junior loan under an intercreditor agreement.

// WORKED IN

// NEXT TO IT

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