Term loan B

A term loan B is syndicated to institutional investors and collateralised loan obligation funds rather than held by banks. It amortises only nominally, typically 1% a year, with the balance due at maturity, which keeps cash free for the business during the hold.

Contrast a term loan A, which amortises meaningfully across its life and is held by relationship banks. The A tranche is cheaper and shorter; the B tranche is the workhorse of leveraged buyouts precisely because it demands so little cash back before maturity.

It is floating rate over a base such as SOFR or Euribor, usually with a floor, and prepayable at par after any brief soft call period. That prepayability is why borrowers refinance opportunistically whenever spreads tighten.

It ranks senior secured, so it sits at the top of the waterfall and typically recovers most in a restructuring, which is what allows it to price below every tranche beneath it.