Glossary
Deal economics
What is tenor?
How long the money is committed for.
Longer tenor means more years of income and more years of things going wrong. Short tenor gets your capital back before the cycle turns, at a lower total return.
A worked example
A $100m loan at 10% earns roughly $60m of interest over a six-year tenor and $30m over three. The six-year loan also has to survive twice as many years of whatever the economy decides to do.
Where it catches you in the game
- Tenor sets how many periods a position accrues before it matures or refinances.
It comes up most on the private credit desk.
Related terms
Learn it by using it
Definitions stick once they've cost you money. Take a seat, make three calls a year and watch what tenor does to your returns.