Definition

Leveraged Loan

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It is a type of loan that is extended to firms or individuals already having a poor credit history and/or considerable amounts of debt. These loans are substantially riskier than traditional loans and, as such, lenders usually demand a higher interest rate to signify the bigger risk.

Leveraged loans are used to support mergers and acquisitions deals, to refinance the existing debt, to change a company’s balance sheet and for general corporate purposes.

Term of the day

Default Risk Premium

What is Default risk premium? Default risk premium refers to the additional return received by the lender from the borrower by assuming default risk. Default r......
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