Have just moved from DCM to Lev Fin and am struggling to understand the difference between OID and NIP for leveraged finance. Are these essentially the same thing but OID is for TLB whilst NIP is for HYB? In addition, are HYB priced similar to IG bonds, ie deducing a FV and then adding a NIP?
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Bump, interested too
What’s NIP? New issue premium?
yes exactly
Ok, I think these are exactly opposite concepts. New issue premium is the premium investors pay that actually decreases yield v coupon, while OID is a discount issuers give banks / investors (increase yield) in order to get transactions done. I could be wrong but think OID also exists in bond context. The extreme example would be zero coupon bond.
OID, debt is sold at a discount to face value.
NIP, debt has a higher interest rate than other comparable debt traded in secondary market.
I think this would be called new issue concession for bond to have higher yield v secondary
thanks, this is clear - so the motivation behind both is the same, just to entice investors to participate in primary?
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