Puerto Rico Senior Debt Term Sheet is a legal document outlining the terms and conditions of borrowing funds by the government of Puerto Rico. This debt is considered senior, meaning it holds priority over other debts in the event of default or bankruptcy. The Puerto Rico Senior Debt Term Sheet includes essential information such as the principal amount borrowed, interest rate, maturity date, repayment schedule, and covenants. It serves as a basis for negotiation between the borrower and potential lenders, providing transparency and clarity on the terms of the loan. There are different types of Puerto Rico Senior Debt Term Sheets, including: 1. General Obligation (GO) Bonds: These are backed by the full faith, credit, and taxing power of the Puerto Rican government. GO bonds are considered the safest form of debt and typically offer lower interest rates due to their perceived security. 2. Revenue Bonds: These bonds are issued based on specific revenue streams such as tolls, taxes, or fees. The repayment of principal and interest relies on the revenues generated by the projects funded by these bonds, such as infrastructure developments or public utilities. 3. Public Corporation Debt: Puerto Rico has several public corporations, such as the Puerto Rico Electric Power Authority (PREP) or the Puerto Rico Aqueducts and Sewers Authority (PRADA). These entities may issue their own senior debt term sheets to fund their operations or infrastructure projects. 4. Tax Anticipation Notes (Tans): These short-term debt instruments are issued by Puerto Rico to address temporary cash flow shortfalls. They are repaid once anticipated tax revenues are received by the government. 5. Emergency loans: In special circumstances such as natural disasters, Puerto Rico may seek emergency loans to fund relief and recovery efforts. These loans may have unique terms and conditions tailored to the specific situation at hand. 6. Restructured debt: Following Puerto Rico's fiscal crisis, some senior debt may have been subject to restructuring agreements. These term sheets outline revised repayment terms, reflecting negotiations between the government and creditors. It is important to note that Puerto Rico's senior debt term sheets have garnered significant attention due to the island's ongoing financial challenges. Factors such as the government's ability to meet repayment obligations, credit ratings, and potential financial assistance from the United States are also relevant considerations associated with these term sheets.
Puerto Rico Senior Debt Term Sheet
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On the other hand, senior debt financing is a high-priority loan backed by collateral and offered at a lower interest rate. How is senior debt calculated? Senior loan or debt is 2 to 3 times EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization).
Senior Debt Ratio means, with respect to any Loan, the ratio of Senior Total Funded Debt to TTM EBITDA of the related Obligor, calculated in ance with the corresponding amount or ratio in the underlying Related Documents for such Loan utilizing the most recently delivered financial results for the related Obligor ...
Senior unsecured debt differs from senior secured debt in that it is not secured by collateral. Instead, debtholders have only a general claim against company assets. If the company goes bankrupt, senior unsecured debtholders are the first tranche to be paid using company assets not held for senior secured debtholders.
Any debt with higher priority over other forms of debt is considered senior debt. For example, a company has debt A that totals $1 million and debt B that totals $500,000. Debt A is senior debt, and debt B is subordinated debt. If the company files for bankruptcy, it must liquidate all of its assets to repay the debt.
Senior debt is debt and obligations which are prioritized for repayment in the case of bankruptcy. Senior debt has the highest priority and therefore the lowest risk. Thus, this type of debt typically carries or offers lower interest rates.
Senior debts are loans secured by collateral (assets) that must be paid off before any other debts when a company goes into default. The lender in this case is paid out of the sale of the company's assets in priority sequence. Their priority position makes senior debts less risky for lenders.