Mandatory Amortization
The contractually-required principal repayment on a debt tranche, paid on a defined schedule regardless of the borrower's discretion. Term Loan A typically amortizes at 5-10% per year on a straight-line basis; Term Loan B amortizes at 1% per year with a bullet repayment at maturity (the standard cov-lite structure); Senior Notes typically have no amortization with bullet repayment at maturity. Mandatory amortization is distinct from optional prepayment (which is at the borrower's discretion) and cash-sweep prepayment (which is contractually required when a leverage trigger is hit).
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Related terms
Absorption Rate · AFFO per Share · Allowed Return on Equity · Alternative Investments · Anchor Tenant · Assets Under Management
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