![]() Since the lender is unsecured and lower in the capital structure, these lenders tend to be more returns-oriented – but the extra attention paid to the yield is reasonable because the lender is taking on extra risk (and should thereby be compensated for the additional risk).This means the pricing attached to the bond is adequate for the lender, and the return meets their lending threshold. ![]() Unlike bank debt, the yield on bonds, therefore, does not change regardless of the interest rate environment. In comparison, the main features of bonds are their fixed pricing (as opposed to floating) and the longer tenor. Since leveraged loans are secured by collateral, they are considered the safest debt capital.The borrower has also pledged its collateral to back the debt, which further protects the interests of the lender. ![]()
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