Finding the Line: Senior Stretch vs. Unitranche (Second of Two Parts)

Speaking of long flights [link], news reached us of an overweight passenger punished for traveling in the main cabin. Or more precisely, the passenger’s owner was penalized.

Viktor, a 22-pound cat of uncertain breed, was smuggled aboard Aeroflot in Latvia heading to Vladivostok – an eight-hour trip. Knowing his pet was over-the-limit, Mikhail Galin swapped a trimmer feline for the weigh-in, then managed to sneak Viktor on.

When the switch was discovered, Mr. Galin was stripped of all his frequent flier miles. An outcry on Russian social media (“Je suis Fat Cat”) failed to move authorities. Said Viktor’s sponsor, “My cat is not fat. He just has heavy bones.”

Where to draw the line is also the topic of our look at senior stretch loans vs. unitranche. As we covered in our first installment, both leverage and loan-to-value become factors in determining a given financing identity. Among several reasons for this distinction, one is ascertaining what yield is appropriate for each tranche.