Highly Leveraged Transaction (HLT)

A highly leveraged transaction (HLT) is a bank loan to a company which has a large amount of debt. Highly leveraged transactions were popularized in the 1980s as a way to finance buyouts, acquisitions or recapitalizations. Highly leveraged transactions are risky in that they add to a company’s debt load and often result in an unattractive debt-to-equity ratio, but the interest income generated from these transactions is significant enough to make them attractive to investors and financial institutions.