Unitranche loan

A unitranche loan combines what would traditionally be separate senior and junior debt into a single facility with one blended interest rate and one set of loan documents. Instead of a company raising a first-lien term loan at SOFR+450 and a second-lien piece at SOFR+850, it raises one unitranche at SOFR+600. The borrower gets speed and simplicity — one lender group, one negotiation, one covenant package — which is why unitranche became the workhorse structure of middle-market direct lending.

Behind the single facade, lenders often split the economics privately through an "agreement among lenders" (AAL): a first-out piece that gets repaid first at a lower effective spread, and a last-out piece that absorbs first losses in exchange for higher yield. These internal splits are typically not visible in public filings, which matters for analysis — two BDCs can both hold "the same" unitranche loan with genuinely different risk positions depending on which side of the AAL they sit.

For portfolio analysis, unitranche positions complicate two things. Recovery expectations are harder to model, because the blended structure hides where a specific holder sits in the waterfall. And spread comparison against traditional first-lien loans needs care: a unitranche at SOFR+600 is not "wide" relative to a first-lien at SOFR+450 — it's pricing a deeper slice of the capital structure.

SpreadVista classifies instrument types — first lien, second lien, unitranche, subordinated — directly from each filer's own Schedule of Investments text across 86 BDCs, so seniority-based spread and mark analytics respect what the filer actually disclosed, and unitranche positions can be screened as their own bucket rather than lumped in with first-lien.