Leveraged Loans (Bank Loans)

Hi all,

I have an interview within the bank loans group at an asset manager next week. I know the term structures are mostly set at floating rates and are extended to corporations that are non investment grade. Im curiouse as to the due dilligence process that goes into pricing these rates. Do they use <abbr><abbr title="weighted average cost of capital">WACC</abbr></abbr> or comparable companies with same credit ratings? Thanks in advance.

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Comments (11)

Jan 14, 2009 - 12:30pm

its mostly comps-- looking at things such as leverage (through the secured bank debt), FCF, and coverage. its also important to look at the market and where deals are currently priced (ie you find a perfect comp where the deal was done at the peak of the market, the L+XXX will be a lot lower than what it would be if done currently)

Jan 14, 2009 - 12:53pm

it then comes down to negotiations.

We're about to enter a Great Depression.
Don't you want a president who's already dressed for it?

------------ I'm making it up as I go along.
Jan 14, 2009 - 3:45pm

Thanks, one other question is what exit options will come about this opportunity? distressed debt, or a restructuring fund would be ideal and I believe this would be a solid foundation in the begining of my career, but those funds typically look at Investment Bankers no?

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Jun 22, 2010 - 11:18pm

As a fist year associate in IB as your profile says, I am sure you should know this by now and if not plenty of resources at your firm to tell you this....although probably not making you look very smart. You could have at least googled it first. I am sure investopedia and wiki could have told you what they were.

Since you are too lazy here is a brief summary:

Levareged Loan - loan made to companies that already have high debt profile.

Syndicated Loan - Loan made to companies by several underwriters.

Simple as that.

Jun 22, 2010 - 11:21pm


Thanks for your reply. Nah, I'm not a first year associate. I just randomly picked something.

by that reasoning, I'm a partner in accounting

speed boost blaze
Jun 22, 2010 - 11:20pm
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