Unitranche

Definition

Unitranche loans replace a traditional multi-layer capital structure with a single debt facility. Internally, lenders may allocate “first-out” and “last-out” economics via agreement, but the borrower typically sees one set of terms. Unitranche structures can simplify financing and speed execution. Allocator Context Allocators assess unitranche strategies through underwriting quality, documentation strength, sponsor dynamics, and recovery assumptions. Because unitranche often sits as a larger single facility, concentration and exposure sizing can matter more, and credit selection discipline becomes central. Decision Authority Committee comfort depends on whether unitranche is being used to solve real financing needs with disciplined structures, or to push leverage and weaken covenants. Allocators typically expect clear reporting on leverage levels, covenant protections, and downside outcomes. Why It Matters for Fundraising Managers should explain where they sit in the unitranche market (sponsor-backed, upper middle market, etc.), how they protect downside, and what terms they will not compromise on. Allocators value clarity over complexity. Key Takeaways Single facility combining senior/subordinated economics Execution speed can increase competition and risk Documentation discipline is essential Strategy quality shows up in downside outcomes