I am preparing for some PE and banking interviews and looking to get a feel for current debt pricing. Does anyone have a sense of the current pricing on senior, sub and mezz debt? I realize that there are basically no deals getting done these days, but if anyone has seen deals shopped or talked to lenders I would appreciate your input.
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We're seeing about a 400 bps+ increase on the senior side (so what was L+200 is now L+600 or L+700. I honestly have not looked at refinancing any senior sub or sub lately and only one of the companies I cover has any sub so I can't give you any good repricing info. On the mezz side we're seeing about 16% all in, usually 2-4% of that being PIK. I don't think mezz has jumped up in pricing nearly as much purely because if you don't have the credit to get any senior, layering a pricier traunche of debt on top doesn't make any sense and there's a limit to returns on debt, even in the riskiest traunches. Once you start creeping up into the high teens and low 20's, you might as well put preferred or straight equity.
EDIT: LIBOR floors of 3% on all senior.
I agree with all of what he said... On top of that, the senior's are very cautious with cash sweeps and the mezz is looking for warrants, no more equity stakes.. With warrants, mezz targets returns in excess of 17%...
You're also seeing funds structure unitranches with senior debt that looks like mezz...
Yes, we're seeing alot of the unitraunches out of the hedge funds and specialty credit funds (i.e. Fortress/Cerberus/GSSLG). All in pricing L+850 or so - blended rate.
Thank you for the info guys.
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