Senior stretch loan

Senior stretch loan

A senior stretch loan, or overadvance loan, is a hybrid debt instrument consisting of both asset-based loan and cash flow loan. Such loans are suitable for two types of companies:

*Companies that have substantial asset base but don't have stable or predictable cash flows. For example, troubled or turnaround companies. Cash flow loans would be much smaller and more expensive for these companies.
*Companies with healthy cash flows but lower assets. In this case, a pure asset-based loan would be insufficient.

For both types, the senior stretch debt structure takes advantage of the combination of the company's assets and cash flow to make significantly more debt available than would have been otherwise.

ee also

*Seniority (finance)

External links

* [http://corp.bankofamerica.com/public/public.portal?_pd_page_label=products/abf/capeyes/archive_index&dcCapEyes=indCE&id=29# Understanding The Leveraged Loan Continuum: Cash Flow, Senior Stretch And Asset-Based]
* [http://www.answers.com/topic/senior-stretch-loan?cat=biz-fin Senior Stretch Loan in Answers.com]


Wikimedia Foundation. 2010.

Игры ⚽ Нужно решить контрольную?

Look at other dictionaries:

  • Senior Stretch Loan — A specific type of loan to a business entity, which possesses certain characteristics of both asset based loans and cash flow loans. Senior stretch loans are cheaper than straight cash flow loans, since the borrowing company has a healthy balance …   Investment dictionary

  • Cash flow loan — is a sort of debt financing, in which a bank lends funds against cash flows that a borrowing company generates. To secure repayment, the bank covenants a borrower on such levels and ratios as enterprise value, EBITDA, total interest coverage… …   Wikipedia

  • Asset-based loan — An asset based loan is a loan, often for a short term, secured by a company s assets. Real estate, A/R, inventory, and equipment are typical assets used to back the loan. The loan may be backed by a single category of assets or some combination… …   Wikipedia

  • Collateralized loan obligation — Collateralized loan obligations (CLOs) are a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various tranches. A CLO is a type of… …   Wikipedia

  • Credit enhancement — Securities Securities Bond Stock Investment fund Derivative Structured finance Agency security …   Wikipedia

  • Collateralized debt obligation — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Collateralized mortgage obligation — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Mortgage-backed security — Securities Securities Bond Stock Investment fund Derivative Structured finance Agency security …   Wikipedia

  • Credit derivative — In finance, a credit derivative is a securitized derivative whose value is derived from the credit risk on an underlying bond, loan or any other financial asset. In this way, the credit risk is on an entity other than the counterparties to the… …   Wikipedia

  • Collateralized fund obligation — A collateralized fund obligation (CFO) is a form of securitization involving private equity fund or hedge fund assets, similar to collateralized debt obligations. CFOs are a structured form of financing for diversified private equity portfolios,… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”