Private Credit / Direct Lending - Resources

All - have a few opportunities in the pipeline for potential associate/analyst positions at large private credit firms (Golub, Antares, etc.) within direct lending groups. Would anyone be able to point to any particular resources that they've found invaluable to prep for such interviews on the technical side. I have a solid foundation in building cash-flow-based LBO models but would like to understand investing from a lender's point-of-view and how that may differ from an equity perspective. For example (topics below are not all-inclusive):

I) How do lenders look at value creation and associated risks, especially if investing in hairier situations. 

II) How to think about structuring transactions including amount of leverage, downside protection through covenants, terms, etc. 

III) Pricing (how to drive alpha versus public markets)  

IV) Developing downside-case projections 

V) Ins and Outs of credit agreements (and differences between major terms across tranches) 

VI) Levers that credit investors pull to drive returns (OID, Floors, etc.) 

At the moment, have access to BIWS courses which have been helpful but don't include a deep dive into the topics above. Ideally, a thorough overview of the topics above would be condensed into a single guide / book / primer, etc., but that maybe too much to ask so any and all recommendations are appreciated! 

Thank you!

Comments (9)

Apr 28, 2021 - 2:35am

PM me if you're still looking for info. I work at a private credit shop and I specifically do direct lending (so can't speak to hairier situations as that would be more special situations/distressed).

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May 4, 2021 - 4:39am

Direct Lending - Primer / Online Course Exercises - launching in ~2.5 months

  • - I'm creating something for this as we speak, as a supplement to the larger Lev Fin Primer/Course, launching in ~2.5 months max. . Also looking for beta-testers / feedback

Plan to launch by the time baby #2 is born in next 2.5 months, but already have 90% of the data / info in draft. If you have an imminent interview, hit me up directly in the meantime and I'll help (the feedback / insight is valuable to me)

OP - reach out - I can send you some cool stuff on most of that to-do list.  Some of it visual (Base vs. Downside Case Analysis example is pretty cool real example),and  some you gotta dig in and get your hands dirty to really conceptualize (Credit agreement, all-in yield, pricing, structuring, risks & mitigants)

Any recommendations, suggestions, etc. would be helpful. Or if you are in the space and have existing case studies, more examples would help, especially w/ SOLUTION version (I already a couple for now but more examples help to see differences)

Post-launch, I'll make more robust / add-on complimentary content, but I'll stop there as to not give away the full vision.

Anybody in the space who's brain I can pick / double-check certain little things, please reach out.

For credit agreement - have an exercise to learn the basics to do a RC/TLA comp, completed by a freshman in Canada in 15-20 min, and others consistently in same time period.

But for direct lending specifically - I'll have some great content - I think I'll have all said and done the #1 largest Direct Lending comps database (yes, more than LCD, LFI, & DLD Databases), w/ hyperlinks to public credit agreements to leverage for this, which I've sourced creatively through guess & check + other means. Might not make that database available bc I'll reduce future barriers to entry/piracy of content, but I'll have exercises for the best 30 of them or under. Sorry for the run-on, but if you think this stuff would be helpful, lemme know.

by the way on VI - All-in yield below

(Note - other ways for direct lenders to drive returns, such as Equity Co-Investment, Warrants, stock).

And Ways to reduce the risk of their money being refinanced, and have more certainty on return economics (heavier call protection - typically "102, 101 hard call" and up vs. 1st Lien Term Loan B (broadly syndicated) = 101 soft call for 6 months. Note - 102, 101 for DL is like the very best deals, typically mega-unitranche deals. Typically see 103, 102, 101 or NC1, 102, 101 and up.

All-in Yield

  • L+400, 1.00% LIBOR Floor, 99.5 OID (assume LIBOR <1%)
  • =
  • 400
  • +100
  • + 12.5 (50 / 4) [OID based on 4-year average life convention - just go with it]
  • = 512.5 bps
  • = 5.125%

More on OID to get it

  • 99.75 OID = 25/4
  • 99.25 OID = 75/4
  • 98.0 OID = 200 / 4 = 50 bps
Jan 13, 2022 - 4:54pm

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