hard · Private Credit & Debt loan-structures-instruments
A direct lender provides a $100 million unitranche facility. Internally, the lender bifurcates the risk with a 'First-Out' bank participant taking $60 million at SOFR + 350 bps and the direct lender retaining the 'Last-Out' $40 million.
If the borrower pays SOFR + 650 bps on the total facility, what is the direct lender's effective spread on their Last-Out position?
- 950 bps
- 1100 bps
- 800 bps
- 1000 bps
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