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Private Credit

Private Credit Operations and Fund Accounting

How private loans are run and accounted for: the agent's role, interest calculations, OID and PIK accounting, non-accrual loans, and how a credit fund's NAV, incentive fees and investor reports are produced.
Start the course
Level
Intermediate
Lessons
11 lessons
Length
3.1 hours
Modules
4 modules

Module 1 · Loan operations

50 min

  1. 1.1

    1.1 The administrative agent's role Free preview

    What the administrative agent does for a group of lenders: notices, rate setting, collecting and passing on payments, and keeping the register.

    15 min
  2. 1.2

    1.2 Calculating interest: SOFR, day counts and interest periods

    How a floating-rate loan's interest payment is worked out: the base rate and floor, the interest period, and the day count convention.

    20 min
  3. 1.3

    1.3 Fundings, paydowns and trade settlement

    How money moves in and out of a loan after closing: new fundings, scheduled and early repayments, and selling part of a position to another lender.

    15 min

Module 2 · Accounting for loans

50 min

  1. 2.1

    2.1 Amortizing OID and fees with the effective interest method

    Why OID and upfront fees are recognized as income over a loan's life, how the effective interest method spreads them, and what early repayment does.

    20 min
  2. 2.2

    2.2 Accruing PIK interest

    How PIK interest is accrued and added to principal, why it's income without cash, the collectibility judgment, PIK toggles and BDC distributions.

    15 min
  3. 2.3

    2.3 Non-accrual accounting

    When a loan goes on non-accrual, what happens to unpaid interest, how cash received is applied, returning to accrual, and why non-accrual rates matter.

    15 min

Module 3 · Fund accounting

55 min

  1. 3.1

    3.1 Capital calls and distributions in credit funds

    How cash moves between LPs and a credit fund: regular income distributions, recycling, subscription lines, fund leverage and splitting payouts.

    15 min
  2. 3.2

    3.2 Calculating NAV

    How a credit fund's NAV is built from loans at fair value, cash and receivables less borrowing and accrued fees, and how it's split among LPs.

    20 min
  3. 3.3

    3.3 Waterfalls and incentive fee calculations

    How credit managers earn performance fees: income incentive fees with a hurdle and catch-up, capital gains fees, and whole-fund waterfalls.

    20 min

Module 4 · Systems and reporting

30 min

  1. 4.1

    4.1 Loan administration systems and data flows

    How loan data moves between the agent, the fund's loan system, the fund administrator and the bank, and how reconciliations and controls catch errors.

    15 min
  2. 4.2

    4.2 Investor reporting

    What credit fund investors receive: quarterly reports, capital account statements, portfolio data such as yield and non-accruals, and BDC public reporting.

    15 min

Final assessment