Private Credit Deals: Floating Margins, Upfront Fees & OID, PIK Interest, Call Protection & Lender Yield

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Price eight quarters of a fictional direct-lending term loan: apply the base-rate floor with MAX, compute the all-in rate and the cash interest on an actual/360 basis, and measure what the floor earned the lender.
• Compute the net cash a lender pays out after an original-issue discount and an upfront fee, build the loan's quarterly cash flows and find the lender's IRR and yearly yield compared with the headline coupon.
• Split a fictional loan's coupon into cash interest and PIK interest, roll the balance forward as the PIK interest is added each quarter, and compute the balance at maturity and the total cash the lender receives.
• Track the drawn and undrawn parts of a fictional delayed-draw tranche over eight quarters, charge interest and a commitment fee, and compute the lender's yield on the money actually lent.
• Look up the repayment price for each year of a fictional call-protection schedule, build the lender's cash flows if the loan is repaid in year 1, 2, 3 or held to maturity, and compare the yields.
• Split a fictional unitranche loan into a first-out and a last-out piece, solve for the last-out margin that keeps the borrower's blended margin unchanged, and see how a bigger first-out piece pushes the last-out margin up.
• Compute the one-year expected loss of six fictional loans from default probability, recovery and exposure, express it as a portfolio loss rate, and measure what a default does to one loan's yield.
• Compare three fictional loans for an investment committee: cash and total coupons, an approximate yield to expected life, the cash yield, a loss-adjusted yield and a rank, finished with a chart.