Yoo Credit Dawgs, How're You Making Money?

Yooo folks in credit, can u tell me where your returns are coming from by: 

OID
Commitment Fees
Closing Fees
Cash Interest
PIK
(any other)

What kinds of returns are u looking to underwrite across sectors (distressed, stressed, performing)? How do these vary by industry??

16 Comments
 

dude this was some next level cringe to read, probably cringier than what OP said and that was bad enough as it was. Dear Christ I have to get off this website. 

 
Most Helpful

All-in yield and underwriting fees - leveraged loan deals

-see my posts detailing all-in yield, fees & flex, etc. 

https://www.wallstreetoasis.com/forums/tla-vs-tlb-maturity-and-leverage#comment-2071053

https://www.wallstreetoasis.com/forums/oid-in-leveraged-loans

1) all-in yield calc (margin, OID, LIBOR Floor).

  • L+400, 99.0, 1.00%
  • = 400 + [100/4] + 100
  • = 525 bps = 5.25%
  • Note: Only trick is OID. OID based on 4yr avg life, so divide by 4

2) UW Fees - BB/Ba2 Transformative M&A deal

  • BB/Ba2 M&A deal
  • BB/Ba2 UW fee = 1.00% to 1.25% on TLB (seen 0.75% tho). Tranches UW Fee will differ
  • Market Flex = 125-150 bps (normal market conditions)

3) UW Fees - B/B2 RC/1L TLB / 2L TL deal

  • RC/1L TLB / 2L TL 
  • RC/1L TLB = 2.25%
  • 2L = 2.75% (+0.50% from 1L); even seen 3.00%
  • Privately Placed 2L TL = 0.25% - 0.50% fee (bank still gets this if it's privately placed - at least it's something)
  • Market Flex = 150-175 bps [+25 bps from 1L] (normal market conditions)

4) Best Efforts Fee - B/B2 TLB deal

  • 1.00%
 

Thanks dawg. Without going in lot details, mind sharing a bit more on the breakdown of those juicy returns u guys have been gorging on? 

 

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