The terms Px uses, defined for a smart non-specialist. No jargon left unexplained.
amend-and-extendPushing out a loan's maturity (and tweaking terms) instead of repaying — buys time, but can mask whether a borrower is truly healthy.
basis pointsHundredths of a percent. 100 basis points (bps) = 1%. Spreads and rate moves are usually quoted in bps.
BDCBusiness Development Company — a regulated, often publicly-traded vehicle that pools investors' money to make private-credit loans. A common way retail investors get exposure.
business development companyA regulated vehicle (often listed) that pools investor money to lend to private companies — retail's main on-ramp to private credit.
CLOCollateralized Loan Obligation — a vehicle that buys a pool of corporate loans and funds itself by issuing tranches of bonds with different risk levels.
continuation vehicleA new fund set up to buy assets from an older fund the same manager runs — gives early investors an exit and keeps the assets in-house.
covenantA promise written into a loan (e.g. keep debt below a limit). Breaking it ('a breach') can let lenders demand repayment or renegotiate.
covenant-liteA loan with few or weak maintenance covenants, so lenders get less early warning and less leverage when a borrower deteriorates.
cram-downA court forcing a restructuring plan onto dissenting creditors. It can override holdouts but reshuffles who recovers what.
defaultA borrower's failure to meet a loan obligation (a missed payment or a breached term). It triggers lender rights and starts the recovery clock.
DIP financingDebtor-in-possession financing — new, top-priority money lent to a company already in bankruptcy so it can keep operating.
direct lendingThe most common form of private credit: a fund lends straight to a mid-sized company, usually at a floating rate, and holds the loan to maturity.
double-dipA structure giving a lender two overlapping claims on the same borrower group, boosting their recovery if things go wrong — at others' expense.
DPIDistributions to Paid-In — how much cash a fund has actually returned to investors relative to what they put in. Real money back, not paper marks.
drop-downAn LME that moves valuable collateral into a new subsidiary out of existing lenders' reach, then borrows fresh money against it.
evergreen fundAn open-ended private-credit fund with no fixed end date — you can usually get in continuously, but getting out can be gated.
gateA limit a fund places on how much money investors can withdraw in a period — it protects the fund but can trap investors when they most want out.
interval fundA semi-liquid fund that only lets investors redeem at set intervals (e.g. quarterly) and often caps how much can leave at once.
IRRInternal Rate of Return — the annualized percentage return on an investment, accounting for the timing of cash flows.
liability management exerciseAn out-of-court move to restructure debt before bankruptcy — frequently rearranging who ranks senior, sometimes at other lenders' expense.
LMELiability Management Exercise — an out-of-court debt restructuring (uptier, drop-down, etc.). Often pits creditors against each other ('creditor-on-creditor violence').
MOICMultiple on Invested Capital — total value returned divided by money put in (e.g. 1.8x). A simple gross measure of how much a fund made.
NAV facilityA loan taken by a fund against the value of its whole portfolio (its net asset value), rather than against a single company. Adds fund-level leverage.
non-accrualWhen a lender stops booking interest on a loan because it no longer expects to be paid — a hard signal that a credit has gone bad.
OASOption-Adjusted Spread — a standard way to measure the yield premium of risky bonds over safe ones; a quick gauge of how nervous credit markets are.
OIDOriginal Issue Discount — a loan sold below face value, which lifts the lender's effective yield. A wider OID often signals lenders demanding more to lend.
PIKPayment-in-kind — interest paid by adding to the loan balance instead of in cash. It eases a borrower's cash strain but lets debt compound silently.
PIK toggleA feature letting a borrower switch interest from cash to payment-in-kind. Flipping it on is often an early sign of cash stress.
priority waterfallThe order in which cash and recoveries are paid out — senior claims first, then down the stack. It decides who actually gets paid when money is tight.
private creditLoans made by funds (not banks) directly to companies. The fund holds the loan instead of selling it on, so returns and risks sit with the fund's investors.
recovery rateHow many cents on the dollar lenders get back after a default. Higher seniority and tighter covenants usually mean higher recoveries.
SOFRSecured Overnight Financing Rate — the US benchmark most private-credit loans float over. When SOFR moves, borrowers' rates and lenders' yields move with it.
spreadThe extra rate a borrower pays on top of the benchmark (e.g. SOFR + 5.5%). It's the lender's compensation for credit risk.
trancheA slice of a structured deal with its own risk and payout rank. Senior tranches get paid first and lose last; junior tranches earn more but absorb losses first.
unitrancheA single loan that blends what would normally be senior and junior debt into one tranche at one blended rate — simpler and faster for the borrower, common in private credit.
uptierAn LME where some lenders agree to make their debt senior to other lenders' debt — pushing the left-out lenders down the priority waterfall.