Senior Debt Financing

Unregistered debt or equity securities negotiated between an issuer and a limited number of investors. The most common form is private, long-term, fixed-rate debt.


Structural Characteristics

    • No exchange listing, active trading, SEC registration or public disclosure
    • Pricing similar to public security at spread over current U.S. Treasuries
    • Transactions negotiated privately with a limited number of investors; typically, "buy-and-hold" investors
    • Senior debt, subordinated debt, structured finance and foreign currency options (secured or unsecured)
    • Flexible payment structure
      • Amortizing or bullet
      • Fixed or floating rate
      • Medium- to Long-Term maturities
      • Three to 20+ years

Typical Size

  • US$25 - $250 million

Typical Uses

Many companies, both public and private, issue in the private placement market for:

  • Debt refinancing
  • Expansion / Growth capital
  • Acquisitions
  • Stock buyback / Recapitalisation
  • Going-private transactions

Issuer Benefits

Advantages relative to bank financing:
  • Diversity of capital providers
  • Tenor of financing commitments
  • Longer maturities
  • Fixed interest rate
Advantages relative to issuing in public markets:
  • Attractive economics, particularly for private placements less than US$500 million
  • Size and depth of market
  • Tailored transactions to meet the company's needs
  • Limited disclosure
  • No requirement for rating agencies
  • All-in costs
  • Quick and efficient execution