Title says it all — what % of EV is being financed with each type of debt, and what are the interest rates? I would imagine these have changed recently given the general economic climate.
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This is mostly in the DL market, since the syndicated market is effectively shut
1L - 30-50% LTV (higher end is uni and priced on high end of range) - S+600-750 depending on leverage/credit quality (S is >4%), upfront fees of 2-4%
HY market - basically closed for sponsor finance
2L - tough, but doable at typical ~400-500 bp premium to 1L for a solid business
Mezz - available, fixed rate product still in the 15% coupon range (split of cash/PIK negotiable)
Pref/PIK notes - available, 18%-20% area
Conditions are generally the most lender favorable that they have been in many years
Thank you so much!!!
Numbers seem off.
1L (not uni/stretch) is going 3-4x lev, 450-550 spread, 1-4% OID. HSD yields.
Stretch Sr. 4-5x lev, 500-600 spread, similar OID. HSD yield for better quality credits, higher for riskier business.
Uni - 5-6.6x lev, 650-700 spread, 2-3% OID. HSD or low double digit YTM.
2L - 1-1.5 turns above 1L, 800-900 spread, 2-3% OID. Typically 375-400 bps yield above 1L. Think low teens YTM.
Fixed rate notes (private placements) going for 12-14% YTM.
Pref. equity, 13-16% depending on PIK, cap stack.
this was mostly right 9 months ago, but things have widened
Agree w AKBOS. This was probably true Q2/Q3 of last year..
What is HSD?
Agree with levels but would say that 2L is only doable if 1L is syndicated (which is the hard part now) so currently you just unitranche and blend 1/2L.
Pref is the new equity: sponsors are using it to tranche their own capital injections rather than leaving it to 3rd party lenders (or so is my experience).
Agree except no one talks about debt in LTV terms but in xEBITDA terms
Both matter with LTV arguably more. One matters more for interest affordability, the other on principal risk.
Ok. 100m EBITDA company. 5x EBITDA. What’s the price range?
Unclear of what deal size you are talking about, which makes a significant difference. SPP publishes a decent report that should provide enough high-level guidance for your question. January 2023 update here, https://drive.google.com/file/d/1M97BoM5eK-gQgd6RvsMaxafMdp2gw8VM/view
Which base rate / interest floor in European LBOs are you using?
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