medium · Private Credit loan-structures-instruments
A senior lender is evaluating a 'Bifurcated Unitranche' for a 200M deal. Lender A (Bank) provides the 120M 'first-out' portion at SOFR + 250 bps. Lender B (Private Credit Fund) provides the 80M 'last-out' portion. The borrower pays SOFR + 650 bps.
What is the implied 'Last-Out' spread for Lender B, and why would Lender A accept a lower rate?
- 1250 bps; Lender A has first-priority recovery.
- 1250 bps; Lender A is an equity holder.
- 1050 bps; Lender A receives a 'ticking fee'.
- 850 bps; Lender A provides the Revolver.
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