hard · Private Credit loan-structures-instruments
A borrower has a $50M Term Loan A at SOFR + 400 bps and a $200M Term Loan B at SOFR + 500 bps. An MFN clause exists on 'the Loans'.
If an incremental facility is issued at SOFR + 600 bps, what happens to the pricing of the TLA and TLB?
- Only the TLB lenders receive a top-up to SOFR + 550 bps
- TLA increases by 50 bps to 450 bps; TLB rises by 50 bps to 550
- Both facilities are re-priced in lockstep to SOFR + 600 bps flat, no cushion
- TLA increases to SOFR + 550 bps; TLB increases to SOFR + 550 bps
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