Preparing Credit Investment Memoranda

When To Use

• Presenting a new credit opportunity (leveraged loan, direct lending deal, distressed debt) to an investment committee or credit committee
• Documenting the rationale for a hold, increase, or exit decision on an existing credit position
• Preparing a formal write-up for a syndicated loan participation, club deal, or bilateral facility
• Building the analytical foundation for a credit rating recommendation or internal risk grade assignment

Inputs To Gather

• Borrower financials: Audited statements (3 years minimum), interim/quarterly results, management projections, and quality-of-earnings report if available
• Capital structure details: Existing debt stack with maturities, rates, covenants, and intercreditor terms; proposed new issuance terms
• Deal documents: Term sheet or commitment letter, credit agreement drafts, security/collateral descriptions, guarantor structure
• Industry context: Sector performance data, comparable company trading levels, relevant M&A or refinancing precedents
• Sponsor/ownership info: For leveraged deals—sponsor track record, equity contribution, co-invest structure, rollover equity
• Third-party reports: Appraisals, environmental assessments, insurance summaries, legal due diligence memos
• Relative value data: Secondary trading levels for comparable credits, new-issue spreads, index benchmarks (e.g., Morningstar LSTA, ICE BofA)

Workflow