Yield premium above a risk-free rate compensating for default risk. Decomposed by the source into: E[y] = r_f + s_BSL + sum_i=1^4 π_i · P_i, i.e., risk-free rate + broadly-syndicated credit spread + four illiquidity/structural premia (size, illiquidity, complexity, covenant-strength). Actual middle-market spreads exceed Merton-predicted spreads because Merton omits illiquidity, the size premium, and asymmetric information.