Pro-Rata Tranche
A portion of a syndicated loan that is made up of a revolving credit facility and an amortizing term loan. The pro-rata tranche is syndicated by banks, as opposed to institutional tranches, which are primarily comprised of non-bank lending institutions. Both tranches may often be found within the same syndicated loan.
Pro-rata tranches are common within the leverage loan market, or in loans to companies with existing high debt loads. Investopedia Says:
Within the pro-rata tranche, the revolving credit line will typically have the same ending or maturity date as the term loan. By forming a syndicate, banks involved in the deal can spread the credit risks among several lenders. Pro-rata tranches have historically been much larger than institutional tranches in terms of dollar size. Related Terms:
Capital Gearing
Credit Facility
Leveraged Loan
Loan Syndication
Pro-Rata
Revolving Credit
Syndicated Loan
Term Loan
Tranches |