Compare direct lending structures and pricing against the syndicated leveraged loan market.
Finance & Banking
Direct Lending and Unitranche Structures in Private Credit
Learn to structure direct lending and unitranche facilities in private credit, from blended pricing and agreement among lenders mechanics to covenant design, BDC vehicles and portfolio workout.
🗓️Duration5 training days
📚Content4 modules · 8 sessions
🎓On completionAccredited attendance certificate
About the programme
Course Overview
Private credit has become the default source of leveraged financing for much of the middle market, and direct lenders now structure deals that once ran exclusively through syndicated bank loan desks. This course explains how that market actually works. Participants compare direct lending economics against the broadly syndicated loan market, then build a unitranche facility that blends first-out and last-out tranches into a single interest rate, drafting the agreement among lenders that governs payment priority and enforcement between tranche holders. Documentation sessions scrutinise EBITDA add-backs, calibrate leverage and interest coverage covenants to a realistic deleveraging path, and work through PIK toggle and flex provisions that appear in current private credit term sheets. The course also covers how business development companies raise capital and the regulatory leverage limits that constrain their balance sheets, before closing on portfolio monitoring, amendment negotiation and workout when a portfolio company underperforms. Exercises use realistic credit agreement extracts and waterfall models, leaving participants able to structure, document and monitor a facility with the judgement a live sponsor relationship demands.
Expected Learning Outcomes
Structure a unitranche facility that blends first-out and last-out tranche economics into a single rate.
Draft an agreement among lenders governing payment priority, voting and enforcement between tranches.
Scrutinise EBITDA add-backs and calibrate leverage and interest coverage covenants to a realistic deleveraging path.
Structure PIK toggle and flex provisions used in current private credit term sheets.
Explain how business development companies raise capital within regulatory leverage limits.
Build a portfolio monitoring and workout process for direct lending relationships under covenant pressure.
Who Should Attend
Direct lending and private credit investment professionals structuring middle market transactions.
Leveraged finance bankers moving between syndicated loan and private credit markets.
Credit analysts underwriting unitranche and first lien or second lien private credit facilities.
Business development company portfolio managers monitoring direct lending exposure.
Private equity finance teams negotiating debt financing for portfolio company transactions.
Fund counsel drafting agreement among lenders and credit agreement documentation.
Course Modules
Select any module to see its sessions and points.
01Private Credit Market and Direct Lending Fundamentals
2 sessions · 8 points
Session 1Direct Lending vs Syndicated Leveraged Loan Markets
- Compare direct lending economics and speed of execution against the syndicated leveraged loan market.
- Assess why private equity sponsors choose a direct lender over a broadly syndicated term loan for certain transactions.
- Identify the segments of the middle market where direct lending has displaced traditional bank leverage finance.
- Evaluate how private credit fund structures, including business development companies, source capital for direct loans.
Session 2Deal Sourcing, Sponsor Relationships and Club Deals
- Build a deal sourcing strategy centred on repeat relationships with private equity sponsors and intermediaries.
- Distinguish a club deal involving several direct lenders from a club of one sole lender arrangement.
- Assess the trade-offs a sponsor faces between speed and certainty of a club of one and syndicated pricing tension.
- Structure lender allocation and hold levels appropriate to a fund's diversification and concentration limits.
02Unitranche Structuring
2 sessions · 8 points
Session 1Blended Pricing and First-Out/Last-Out Tranching
- Structure a unitranche facility that blends first and second lien economics into a single blended interest rate.
- Allocate first-out and last-out tranches within a unitranche structure based on relative risk and recovery priority.
- Calculate the blended yield a unitranche facility must deliver to compensate first-out and last-out lenders fairly.
- Compare unitranche structures against a traditional first lien plus second lien or mezzanine capital stack.
Session 2Agreement Among Lenders and Waterfall Mechanics
- Draft an agreement among lenders that governs payment priority, voting and enforcement between first-out and last-out holders.
- Model a payment waterfall showing how proceeds are distributed between tranches on a default or prepayment.
- Negotiate turnover and standstill provisions that protect first-out lenders if last-out holders act unilaterally.
- Assess buy-out and payment-in-kind option rights available to first-out lenders under the agreement among lenders.
03Credit Documentation and Covenant Design
2 sessions · 8 points
Session 1Financial Covenants, EBITDA Add-Backs and Covenant-Lite Structures
- Set leverage and interest coverage financial covenants calibrated to a borrower's projected deleveraging path.
- Scrutinise EBITDA add-backs proposed by a sponsor to identify aggressive or unsupported adjustments.
- Assess the risk profile of a covenant-lite structure against a traditional maintenance covenant package.
- Negotiate covenant cushions and equity cure rights that balance borrower flexibility with lender protection.
Session 2PIK Toggles, Flex Terms and Event of Default Provisions
- Structure PIK toggle provisions that let a borrower defer cash interest in exchange for a higher accruing rate.
- Draft flex language allowing pricing or terms to adjust if syndication or fund allocation conditions change.
- Define events of default specific to private credit, including sponsor change of control and reporting failures.
- Assess information rights and reporting covenants that keep a direct lender informed between formal amendments.
04Portfolio Monitoring, Vehicles and Workout
2 sessions · 8 points
Session 1Business Development Companies and Regulatory Leverage Limits
- Explain how business development companies raise capital and deploy it into direct lending portfolios.
- Apply regulatory leverage limits and asset coverage requirements that constrain BDC balance sheet capacity.
- Assess how BDC structure affects a direct lender's cost of capital and competitive pricing position.
- Compare BDC, private fund and separately managed account vehicles used to deploy direct lending capital.
Session 2Portfolio Monitoring, Amendments and Workout in Private Credit
- Build a portfolio monitoring framework tracking covenant compliance, EBITDA trends and sponsor communication.
- Negotiate amendment and waiver requests from a borrower experiencing covenant pressure or an add-on acquisition.
- Identify early warning indicators in portfolio company financials that call for closer credit monitoring.
- Coordinate a workout process with a sponsor and other direct lenders when a portfolio company underperforms.
What the participant receives
4 course modules
A structured syllabus
8 training sessions
across 5 days
32 detailed points
Applied, detailed content
Accredited attendance certificate
On completing the programme
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