What are the prevailing interest rates for LBOs currently?
For let's say bank debt and senior notes for a standard LBO, where are the interest rates at these days?
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You planning to buy something?
Let me know if you need advisory services.
It really depends, we'd need more info to opine.
I am working on an LBO model and need to plug in assumptions for the bank debt and senior notes interest rates. Its a 5 year holding period, ~$3bn deal. Do you reckon 6% and 12% are reasonable interest rate assumptions to use?
What's the leverage multiple? Either way 6% is too low right now for bank debt if SOFR itself is at 5.3%.
9% and 12% seems more reasonable. Like someone else said, no one is getting 6% when SOFR is over 5%
What's the leverage and purchase multiple?
Leverage multiple is 9x a depressed LTM EBITDA and 5x a more normalized EBITDA.
Purchase multiple is 17x a depressed LTM EBITDA and 10x a more normalized EBITDA.
lol 6% is closer to the spread on senior than it is to the all in rate. SOFR + 5.50 ish
S+450 98.5 OID on 1L
junior debt at S+700 or something IDK
.
I mean depends on company but I’ve been hearing more like S+475-525 at 98 for 1L. Similar though. And I hear the trend is going in the right direction.
What does "98.5 OID on 1L" mean?
Is there any way to check the debt terms on similar recent LBO's? It seems like the details are usually not disclosed
If you have access to PitchBook, LCD Comps is your friend here.
People forget to take a more high level view. Capital call facilities are trading for 10-11% and that's virtually risk free money. So if you're taking single company risk ~12% is actually really low/cheap for this environment.
Do you know if you can invest in the credit for capital call financing? Like are the public efts or any private instruments to get exposure to that? Cause as you mention, it’s not fully risk free but has good protection.
There are a few credit funds doing them now but banks dominate the space. Not really a syndicate play
Agree it’s around S+400~500 for most first lien; 2nd lien could be an additional 300
That's really low, dude. Should be Prime instead of SOFR. Once again, capital call lines are pricing at PRIME +100-200...that's 9.5-11%
More like S+550-650
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