hard · Private Credit loan-structures-instruments

For a 3-year expected life, which factor will cause the realized gross IRR to a hold-to-maturity lender to DIVERGE MOST from a naive 'coupon + amortized OID + amortized fee' yield-to-maturity quote, assuming no default?

1. The SOFR floor binding above current SOFR, which raises every coupon above the indexed rate until SOFR exceeds 1.00% and is the single largest source of additional yield over the index
2. The reinvestment-rate assumption embedded in IRR, since YTM and IRR treat interim coupon reinvestment identically and therefore should never diverge on this floating-rate loan
3. The OID being quoted as a percentage of face value rather than of the funded purchase price, which understates the discount's true yield contribution by roughly 200 basis points annually
4. The amortization of the upfront fee over the expected 3-year life rather than the stated maturity date, which is immaterial because the fee is earned at close regardless of prepayment timing

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