easy · Private Credit market-sourcing-sponsor-dynamics
The 'Illiquidity Premium' in private debt refers to which of the following?
- The penalty a borrower must pay for failing to maintain a minimum cash balance on its balance sheet.
- The difference between the cash pay interest rate and the PIK interest rate charged on the same debt tranche or facility.
- The additional yield required by investors for holding assets that cannot be easily sold in a secondary market.
- The fee paid to an investment bank for arranging, underwriting, and syndicating a broadly syndicated leveraged loan facility.
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