medium · Corporate Credit Analysis ratings
A leveraged loan is launched at SOFR + 450 bps with a 1.0% floor and 98 OID. If the market demand is exceptionally strong, 'Reverse Flex' might be used to remove the floor.
What is the impact on the investor's yield in a low-rate environment where SOFR is 0.25%?
- The yield decreases by 75 bps
- The yield decreases by exactly 100 bps
- There is no impact because SOFR is above zero
- The yield increases by 25 bps
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