Quote:
Originally Posted by GioforPM
[sigh] That's not what was being discussed as leverage. What was being discussed was using one asset as collateral to borrow for other purposes. In other words "leveraging" the ownership in the team.
Definition:
lev·er·age
/ˈlev(ə)rij,ˈlēv(ə)rij/
FINANCE
verb
1.
use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.
"without clear legal title to their assets, they own property that cannot be leveraged as collateral for loans"
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Leveraged loans are usually secured by the company's collateral and occupy the safest space for a lender in the company's capital structure. Bonds from ..
But thanks for the lesson on how secured debt works.  |
You made the comment that unsecured debt is not leverage and that is 100% incorrect.
Companies that are able to borrower on large unsecured lines are able to do so because they have huge asset holdings which have no security against them . And you'd expect that those companies would have many covenants that restrict their borrowings and giving security.
Your comment above even proves that by saying "usually". Which means that leveraged loans can be unsecured.
I believe you've been "lawyered" by a layman.