Sample Backer Economics

Let's take the below deal terms as an example of how back-leverage works:

Hypothetical Transaction:

• Facility Size - $5,000,000

• Borrower Coupon - 12%

  • Senior Net Coupon = % Gross Coupon - 20% Junior Relocation - 10% Pool Reserve

  • Junior Net Coupon = % Gross Coupon + 20% Junior Relocation - 10% Pool Reserve

• Leverage Ratio - 4x

• Backer Investment: $1,000,000

• Senior Pool Investment: $4,000,000

Senior Pool Economics: 8.4%

Backer Economics: 20.4%

The table below shows the economics for both the Backers and the Senior Pool for a Borrower Pool with details above. You can download this sheet here.