Yoo Credit Dawgs, How're You Making Money?

Subscribe

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??

 

 

 

Comments (16)

 
Sep 19, 2020 - 3:32pm

The biggest difference too you forgot to touch on is deal size. The further down you go, the more equity-like credit becomes.

 
Sep 19, 2020 - 4:32pm

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%
Start Discussion

Popular Content See all

Biggest Regret in Undergrad
+45IBby Prospective Monkey in Investment Banking - Mergers and Acquisitions">Prospect in IB-M&A
Virtual Summer Interns - which banks sent you WFH gear?
+16IBby Intern in Investment Banking - Industry/Coverage">Intern in IB - Ind
Meal plan in IB
+11IBby 1st Year Analyst in Investment Banking - Industry/Coverage">Analyst 1 in IB - Ind
Making the first move as a woman?
+10OFFby Intern in Investment Banking - Generalist">Intern in IB - Gen
What is 1st year all-in comp for MMs?
+7IBby Intern in Investment Banking - Mergers and Acquisitions">Intern in IB-M&A

Total Avg Compensation

October 2020 Private Equity

  • Principal (6) $693
  • Director/MD (14) $640
  • Vice President (53) $361
  • 3rd+ Year Associate (60) $272
  • 2nd Year Associate (112) $246
  • 1st Year Associate (242) $222
  • 3rd+ Year Analyst (23) $162
  • 2nd Year Analyst (52) $141
  • 1st Year Analyst (151) $119
  • Intern/Summer Associate (17) $66
  • Intern/Summer Analyst (168) $60

Leaderboard See all

1
LonLonMilk's picture
LonLonMilk
98.4
2
Jamoldo's picture
Jamoldo
98.3
3
Secyh62's picture
Secyh62
98.2
4
CompBanker's picture
CompBanker
97.8
5
redever's picture
redever
97.7
6
Addinator's picture
Addinator
97.6
7
frgna's picture
frgna
97.5
8
bolo up's picture
bolo up
97.5
9
NuckFuts's picture
NuckFuts
97.5
10
Edifice's picture
Edifice
97.3