Not just senior, but super senior — revolving credit facilities

Earlier this month, frozen food retailer Iceland Foods announced that it had refinanced its existing debt with a high-yield bond issue and a super-senior revolving credit facility. So what is a super-senior facility?

The contraction in traditional bank lending in the wake of the financial crisis gave rise to an increased use of bond financing, both secured and unsecured, in the leveraged acquisition market. However, such financing does not have the necessary flexibility for working capital and operational requirements; therefore where there is a secured bond issue, it has become the practice to combine it with a super-senior revolving credit facility (RCF).

Towards the end of 2013, the Loan Market Association (LMA) introduced a recommended form of agreement for super-senior RCFs and an associated intercreditor agreement…

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