The Blog

Musings on corporate finance, fund raising, debt capital and other matters

Category archives: Definitions

RSS feed of Definitions

A term to describe the composition and relative rank of the instruments used to finance a company. The capital structure incorporates debt, hybrid instruments (such as mezzanine debt and preferred equity) and equity.

Debt where the security of the loan is specifically tied to an underlying asset. The range of assets that may be used as security can be wide, including property, inventory and trade receivables.

A broad term to describe the proliferation of channels, companies and instruments that have emerged outside the realm of the traditional financial system. It is most commonly associated with companies operating in the peer-to-peer space, such as peer-to-peer lending and crowdfunding. Often called “shadow banking” or “non-bank funding”.

A measure of the value of a loan to the collateral against which it is secured. A €30million loan secured by a €50 million property would be described as a 60% LTV loan.

Debt that ranks below senior bonds or loans but above common equity. Junior Debt instruments are often called mezzanine loans but can also be structure as preferred equity.

A term for financial or corporate entities that pool money, to be used for the purchase of securities (including loan origination), real property and other investment assets. The most well-known entities are banks, insurance companies, pension and hedge funds, real estate trusts, investment advisors and mutual funds.