hard · Debt Capital Markets
A second-lien term loan with exactly 4 years remaining until maturity is quoted in the secondary market at a price of 94.00. The loan pays a floating rate of L + 500 bps and features a LIBOR floor of 1.50%.
If the current 3-month LIBOR is 1.00%, which of the following is the best estimate for the secondary-market discount margin (DM)?
- 550 bps
- 750 bps
- 700 bps
- 650 bps
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