...Negotiation Points Vary: Second-lien loans are a common component in the capital structures of leveraged names; 26% of the issuers within the U.S. institutional leveraged loan market have second-lien debt. The security interest provided by the collateral makes second- lien loans more appealing than unsecured notes. The tug-of-war between first- and second-lien lenders is influencing the current restructuring landscape. Moreover, negotiation points vary substantially, depending on the specific documentation included in credit agreements, collateral agreements and intercreditor agreements. Unitranche Loans versus First-Lien/Second-Lien: The traditional first-lien/second-lien structure usually has separate sets of documents for each lender in the structure. On the other hand, unitranche loans combine senior and junior tranches into one single tranche with one set of documents. Therefore, in terms of intercreditor negotiations, the traditional first-lien/second- lien structure affords more...
