LBO Question
Just curious if someone could give guidance for debt assumptions for a model test I am working through.. so I am modeling the TLB @ SOFR + 400bps and then having the first year start with today’s 3-month average SOFR (460bps). So then the TLB would be at basically 8.6% interest rate, does that sound about right for current market? And does it make sense to model in a 25 bps decline each year to get to something more normalized SOFR over the forecast or would that be seen as too aggressive? Should I just hold SOFR flat for the forecast?
Keep it simple. Just use the 10-year swap (or whatever more closely aligns to your projection period).
I wouldn't model in rate decreases. If anything I would build some flex for rates to go up.
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