Conducting Initial Diligence as a Credit Investor

Welcome back,

It’s time to talk about the initial diligence conducted within credit deals. Of course, these deals are vastly different depending on how many lenders are involved in the deal and how big the transaction is. We’ll cover how the initial stages of a credit deal comes together and how you’ll want to approach your initial diligence.

This is another key post in my Private Credit, Direct Lending, and High Yield Course materials. I want to give you the best and top ways on how to succeed in these high paying finance jobs.

Okay, let’s start diving into the differing diligence timelines between the different credit markets:

A high-yield bond roadshow can be done within a day but may last as long as a week. A new issue of a broadly syndicated loan (BSL) may take a week to 2 weeks to complete. A “direct” loan? This may be as quick as a month, maybe 2-3 months, or hell it could take a lot longer depending on the state of the financing market or if there’s a Company specific quirk. Credit shops are often given a “print & sprint” labeling depending on the reputation of the shop. This means once they raise their fund, or have the confidence to ramp their CLO, they’re quick to put capital to work and execute deals on fast timelines. Doing every deal that hits the BSL market or every deal xyz Sponsor shows you in the direct market may imply that you’re “less thoughtful” of a credit investor and are more so focused on getting $ out the door and clipping a coupon.

Transactions can include the following:

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