Yair Galil, Victoria Jones Yilmaz Discuss Concept of Fungibility of Incremental Term Loans in Practical Law Practice Note

Article  |  October 3, 2025

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Gibson Dunn of counsel Yair Galil and associate Victoria Jones Yilmaz are the authors of a Practice Note for Practical Law [PDF] that explains the importance of achieving fungibility of incremental term loans and highlights an important yet sometimes-overlooked aspect of incremental loan structuring that must be considered in order to attain true fungibility of the incremental term loans with existing initial term loans: calibrating amortization terms.

“Careful review of the current effective amortization rate of the initial term loans (as opposed to the facial amortization rate in the credit agreement), as well as due regard to the impact of prior prepayment events,” write the authors, “can help avoid inadvertent misalignment of amortization schedules that could interfere with full fungibility.”