Unsecured Loan
Short definition
An unsecured loan is not backed by a specific asset charge; it relies on the firm’s general paying power (and covenants). Spread is usually wider than secured; flexibility is higher.
Detailed explanation
Senior unsecured sits after secured and before subordinated and equity. A negative pledge protects this creditor by restricting later security.
Ratings and cash visibility set the unsecured limit. A secured stack cuts unsecured capacity (structural subordination).
Why it matters for the CFO
Later financing and a bond issue need this headroom. Pledging everything shuts the door.
How to read it
Unsecured / total debt shows how much of the waterfall is “general credit”.
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Definitions are educational. They are not investment, credit or tax advice.