What is 2nd lien debt?

What is 2nd lien debt?

Second lien lending refers to loans where a creditor’s claims are subordinated to those of the creditors who hold senior debt. Senior lien holders might receive 100% of the loan balance if the collateral on the loan is sold or they might only receive a fraction of the total amount of the loan.

What is the difference between first and second lien?

Second-lien debt is borrowing that occurs after a first lien is already in place. It subsequently refers to the ranking of the debt in the event of a bankruptcy and liquidation as coming after first-lien debt is fully repaid. Another term for this type of debt security is junior or subordinated debt.

What is the difference between term loan A and B?

Term Loan A – This layer of debt is typically amortized evenly over 5 to 7 years. Term Loan B – This layer of debt usually involves nominal amortization (repayment) over 5 to 8 years, with a large bullet payment in the last year. Depending on the credit terms, bank debt may or may not be repaid early without penalty.