Credit Markets
This section explores the role of debt in real estate capital structures, with a focus on the pricing, spreads, and risk considerations It is organized into three sections:
Highlights two foundational studies (“High-Yield Debt: It’s Good Until It’s Not” and “High-Yield Lending’s Characteristics as a Function of Asset-Level Volatility”) that provide theoretical and empirical perspectives on the behavior of high-yield credit across varying asset conditions.
This section is organized into three subsections that analyze how debt costs and spreads vary across leverage ratios and market conditions:
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Cost of Debt at Various Leverage Ratios
Assesses how borrowing costs change with different loan-to-value (LTV) levels, providing insight into the relationship between leverage and credit pricing.
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Analysis of Debt Spreads
Tracks the behavior of credit spreads over time, highlighting differences between high- and low-LTV loans relative to the risk-free rate.
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Initial Thoughts on Mezzanine Financing
Introduces preliminary considerations around mezzanine debt, focusing on its role in the capital stack and implications for return and risk.
This section is organized into three subsections that explore the characteristics and risks of high-yield lending:
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High-Yield Debt Considerations
Reviews key features of the high-yield debt market, including investor appetite, pricing dynamics, and borrower profiles.
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Tranche-Level Risk Considerations
Examines how risk is distributed across senior and subordinated tranches, focusing on repayment priority, expected losses, and sensitivity to market shocks.
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Asset Characteristics in High-Yield Debt
Analyzes how underlying asset-level factors such as volatility and cash flow stability influence the performance and risk profile of high-yield loans.