What key aspect of Term Loan B makes it appealing during periods of liquidity?

The appeal of Term Loan B during periods of liquidity primarily stems from the lower principal repayment requirements compared to other types of loans, such as Term Loan A. Typically, Term Loan B structures feature a more convenient repayment schedule, often allowing for minimal or no scheduled amortization throughout the term of the loan, with a larger balloon payment due at maturity. This structure can be particularly attractive for borrowers during uncertain economic conditions or periods of liquidity stress, as it provides more cash flow flexibility and the ability to preserve capital for investment or operational needs rather than diverting it to regular principal repayments.

While factors such as interest rates, repayment terms, and covenants do play significant roles in the attractiveness of a financing option, it is the reduced annual principal repayment obligation that directly contributes to enhanced liquidity management and operational resilience for borrowers during challenging financial periods. This allows companies to navigate volatility more effectively without the immediate pressure of meeting substantial debt repayment obligations.