Typical interest rates in today’s market
Hi, I’m working on getting better intuition behind some of the assumptions in an LBO. In terms of 1st/2nd lien debt, what are some typical SOFR + rates, mandatory amortization percentages, and floor percentages? Is it helpful to think of lien 1 as term loans and lien 2 as senior notes? Is there typically always prepayment optionality for lien 2 as well?
Right now these are some rates I think are typical Revolver: SOFR + 400 1st Lien: SOFR + 400, 5% mandatory amort, 2% floor, prepayment allowed 2nd Lien: SOFR + 700, 2% mandatory amort, 2% floor, prepayment not allowed
Thank you so much
Based on the most helpful WSO content, here are some insights into the current market for 1st and 2nd lien debt, including typical SOFR + rates, mandatory amortization percentages, and floor percentages:
Typical Interest Rates and Terms:
Revolver:
1st Lien Debt:
2nd Lien Debt:
Additional Insights:
Lien Hierarchy:
Prepayment Optionality:
Market Context:
These details should help you refine your assumptions for an LBO model. If you need more specific or updated information, consider checking the latest discussions and threads on Wall Street Oasis.
Sources: Loan Terms, Overview of Leveraged Finance, Overview of Leveraged Finance, Debt for LBO?, Mezz Debt vs. Traditional Debt Financing
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