Fundamentals of Private Debt Investing

DON’T HAVE A DEBT OF KNOWLEDGE ABOUT DEBT

Private debt is a very specific, specialized industry.

Maybe even more than for private equity or hedge funds, there’s not a lot of knowledge about it.

Which is a shame, considering it can be a very profitable one.

It used to be that, in the past, you wouldn’t be able to just find a course that illustrates everything about private debt.

The types of debt instruments, the investment strategies, the actual investment vehicles, and more.

You wouldn’t be able to find a centralized repository of knowledge on everything private debt.

That is, until this course.

MAKING PRIVATE DEBT PUBLIC

Unlike other courses, this course is extremely comprehensive and covers all main areas of the Private Debt profession. Not just valuation. Not just the job activities. Not just fundraising and fund marketing.

ALL of them.

This extremely comprehensive course is divided into four main modules:

• The Fundamentals, where we cover how private debt essentially works, in terms of the industry, investing, how loans work, and more;

• Debt Products, where we cover the different types of debt instrument issued by banks, private lenders or others, and what their characteristics are;

• The different Investment Strategies, from real estate debt, to venture debt, royalties, and many more;

• How Loan Agreements work, breaking down these documents into the key sections, as well as the meaning of each one of them, from the precedent conditions to covenants, and an analysis of the different types of covenants;

LET ME TELL YOU… EVERYTHING

Some people – including me – love to know what they’re getting in a package.

And by this, I mean, EVERYTHING that is in the package.

So, here is a list of everything that this course covers:

• You’ll learn about the essential terms and keywords in terms of debt. Maturity, principal, interest. What is direct lending, what is leveraged lending. What is secured debt, what is collateral, what is overcollateralization, what do debt liens mean, what is bilateral and syndicated lending, what is a credit facility, what does debt seniority or debt instruments being “investment-grade” mean, what is the yield or interest rate, what is securitized debt (structured finance products), what is debt rediscounting, what are covenants, and what are primary and secondary transactions in funds;

• You’ll learn about the different payment modalities for both the principal and the interest of debt. Principal: Amortised, bullet, sinking fund, call and put provisions. Interest: Cash, PIK (paid-in-kind), step-up, zero-coupon, deferred interest, periodic reset;

• You’ll learn about the different debt characteristics. Public or private, used to finance operations or a transaction, short- or long-term, with instruments above or below investment grade, secured or not, with a fixed or a floating interest rate, being a term loan or a revolving line of credit, being committed or uncommitted, and being provided by banks, private lenders or the bond market;

• You’ll learn about similarities and differences between Private Equity and Private Debt, including similarities in fund structures and allocator profiles (closed-end funds), but with different return models (exits in PE versus fixed income in PD), as well as the differences between debt and equity underwriting (structuring debt tranches vs. structuring share price and quantity), and the intersection between both (financing LBOs with private debt, for example);

• You’ll learn about the two main types of private debt vehicles: BDCs (Business Development Companies) and private credit funds, as well as the major differences between them (types of investors allowed + investment strategy bias);

• You’ll learn about the main types of debt instruments provided by banks, including term loans versus RCFs (Revolving Credit Facilities), and the subtypes of RCFs (including overdraft facilities, liquidity facilities), Asset-Based Lending (ABL) – usually used for inventory finance or Accounts Receivable (A/R) finance, including factoring – as well as trade finance solutions (Letters of Credit or L/Cs, PO finance and forfaiting), project finance, money market facilities and leases, as well as the inner workings of syndicated loans;

• You’ll learn about the main types of DCM (debt capital markets) debt instruments that exist, including commercial paper, or bonds and notes, including corporate bonds and high-yield bonds, with different levels of risk and yield;

• You’ll learn about the different types of investment strategies, from middle-market corporate lending, to real estate, infrastructure debt, and many others;

• You’ll learn how middle-market corporate loans work, usually provided either by senior, secured bank debt or private mezzanine debt, with different levels of risk and demands (maintenance financial covenants);

• You’ll learn how mezzanine debt works, originally an intermediate step between equity rounds and bank debt, but nowadays reduced to a specific niche, either for bespoke financing needs, or as a replacement for high-yield bonds at times of instability;

• You’ll learn how Asset-Based Lending (ABL) works, with collateral being specific assets of the borrower, frequently used for working capital needs, using either inventory or Accounts Receivable (A/R) as collateral, and usually repaid by the liquidation of the collateral assets;

• You’ll learn how real estate debt works, for the development or maintenance of properties of different types (residential or commercial, including all categories of property, from offices to retail, industrial, hospitality and other types), and, specifically for senior, secured real estate debt, its presence as core in many portfolios, as a tested, reliable strategy;

• You’ll learn how infrastructure debt works, mainly for energy and transportation purposes (power plants, oil pipelines, airports, roads and more), and mostly senior, secured debt where a government is a borrower. Lower risk and lower reward, usually used as a risk dampener;

• You’ll learn how structured finance products work, including CLO (Collateralized Loan Obligations), CDOs (Collateralized Debt Obligations) or MBSs (Mortgage-Backed Securities), how the securitization process works, and their role in the 2008 subprime crisis;

• You’ll learn how distressed debt works, mainly DIP (Debtor-In-Possession) debt, where lenders intervene during a critical liquidity crisis of the borrower, helping them prevent bankruptcy and profiting from their recovery;

• You’ll learn how venture debt works, as a type of Venture Capital (VC) but with debt instead of equity. Ideal for when the startup doesn’t want to give up more equity, or just can’t due to circumstances (down rounds), with high barriers to entry in terms of specialized knowledge and contacts;

• You’ll learn how royalties work in terms of debt investing, licensing the rights to IP (Intellectual Property), namely in sectors such as life sciences/big pharma, entertainment such as movies and music, or consumer brands such as makeup and consumer electronics, and the high barriers to entry in terms of knowledge and contacts;

• You’ll learn how consumer lending, marketplace lending and P2P lending work, an industry evolving at a quick pace, and how private lenders can obtain exposure to this strategy, usually through rediscount lending through marketplaces or platforms;

• You’ll learn about loan agreements/credit agreements in general, including specific sections such as conditions precedents, the commitment, representation and warranties, the definitions used, and, the most “famous” components – the covenants;

• You’ll learn about the definitions used in credit agreements, such as what is “debt” and what is “EBITDA”, or what are “consistently applied” GAAP, and how small changes in these can radically change the attractiveness of such agreements. You’ll also learn about how negotiable can be secondary definitions, such as what are “dividends”, what are “investments”, and what are “material” events;

• You’ll learn about what are representations (affirmations by the borrower), as well as the three main categories of representations they must make: financial, business and legal representations – as well as examples of each;

• You’ll learn about the three main types of covenants – affirmative, negative and financial, as well as specific examples of affirmative covenants (actions the borrower must take, such as disclosing documents, using the proceeds for specific purposes, being insured, and more) and negative covenants (actions the borrower cannot take, such as speculating with loan money, taking on more debt or liens, changing the business fundamentally, and more);

• You’ll learn about financial covenants in specific, including their two main types, incurrence and maintenance, and the three main subtypes of maintenance covenants (performance-based, date-based and hybrid). We’ll also cover the most frequent types of maintenance covenants – coverage ratios, including the three most common ones: the Interest Coverage ratio, the Debt Service Coverage Ratio (DSCR), and the Fixed-Charge Coverage Ratio (FCCR) – as well as other frequent covenants such as the leverage ratio or limits on leases and capital expenditures;

MY INVITATION TO YOU

Remember that you always have a 30-day money-back guarantee, so there is no risk for you.

Also, I suggest you make use of the free preview videos to make sure the course really is a fit. I don’t want you to waste your money.

If you think this course is a fit and can take your knowledge of PE to the next level… it would be a pleasure to have you as a student.

See on the other side!

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• 4 stars: 43 votes
• 5 stars: 75 votes

Frequently Asked Questions

How long do I have access to the course materials?

You can view and review the lecture materials indefinitely, like an on-demand channel.

Can I take my courses with me wherever I go?

Definitely! If you have an internet connection, courses on Udemy are available on any device at any time. If you don’t have an internet connection, some instructors also let their students download course lectures. That’s up to the instructor though, so make sure you get on their good side!