Private Credit Strategies

1.1 Sponsor vs. non-sponsor lending Free preview

How lending to private equity-owned companies differs from lending to founder- and family-owned businesses, and what each means for terms.

1.2 Unitranche and first-out/last-out structures

Why borrowers like a unitranche, how an agreement among lenders splits it into first-out and last-out pieces, and how it compares with a two-lien stack.

1.3 Lower, core and upper middle market

How managers split the middle market by borrower EBITDA, why definitions vary, and how leverage, covenants, pricing and control change with size.

2.1 Mezzanine and second lien

Where second lien and mezzanine sit, how mezzanine earns cash interest, PIK and warrants, and why junior lenders recover less and charge more.

2.2 Preferred equity and holdco PIK notes

Capital that sits below all of an operating company's debt: holdco PIK notes, preferred equity, structural subordination and how the claim compounds.

2.3 Distressed and special situations

Buying debt of stressed or defaulted companies below par, trading vs. control strategies, how price and recovery drive returns, and special situations.

2.4 Rescue financing and capital solutions

New money for companies that can't borrow on normal terms: priming loans, structured equity and liquidity lines, and why the terms are so tight.

3.1 Asset-based lending and borrowing bases

Lending against receivables and inventory: eligible collateral, advance rates, reserves, the borrowing base and how availability is worked out.

3.2 Asset-backed finance: consumer, equipment and royalty pools

Lending against pools of many small assets through an SPV: advance rates, first-loss equity, excess spread, performance triggers and originator risk.

3.3 Venture and growth debt

Lending to venture-backed companies that may not be profitable: interest-only periods, warrant coverage, runway covenants and reliance on equity investors.

3.4 Niche strategies, such as litigation finance

A short tour of litigation finance, insurance-linked lending, trade finance, and aviation and shipping finance, and what these niches share.

4.1 Real estate debt: senior, mezzanine and bridge loans

Lending against property: LTV, debt yield and DSCR, the senior, mezzanine and bridge layers, and what a fall in value does to each.

4.2 Infrastructure debt

Lending to long-lived essential assets: project vs. corporate lending, CFADS, DSCR covenants and lock-ups, and construction vs. operating risk.

5.1 Subscription credit lines

How lenders size loans to funds against LPs' uncalled commitments, why funds use them, and how a subscription line can lift IRR while lowering the multiple.

5.2 NAV lending

Loans secured by the value of a fund's portfolio: how LTV limits work, what a fall in NAV does, and why borrowing to pay distributions draws questions.

5.3 GP financing

Lending to fund managers and their principals: financing the GP commitment and loans to management companies secured by fee income, versus buying GP stakes.

6.1 Return, risk and loss profiles side by side

Every strategy in the course compared on collateral, seniority, return drivers, losses, liquidity and the cycle, plus expected loss by strategy.

6.2 Case study: building a multi-strategy allocation

A fictional pension plan splits $500m across four credit strategies: blended yield, expected loss and return after losses, and what the averages leave out.