Module deep-dive
MFN protection
Yield protection for existing lenders against materially higher-priced incremental tranches. 50 bps floor with 6-month sunset is current market.
Protection profile
Standard 50 bps MFN with a six-month sunset. Acquisition-financed and ratio-test incremental tranches are excluded — typical 2024 sponsor drafting.
50 bps trigger differential — at the 2024 cohort median.
§2 §2.01 →WeakSunset window6 months from Closing — falls off before most refinancings.
§2 §2.01 →WeakAcquisition exclusionAcquisition-financed incrementals exempt — common loophole.
§2 §2.01 →ModerateYield calculationAll-in yield includes OID + upfront fees; no hidden carve-outs.
§1 §1.01 →Sunset is the principal weakness. After month 6, sponsor can issue priced-up paper without triggering MFN.
Basket chain4 terms · 3 dependencies
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Wiki precedent2 cases
Envision Healthcare — 2020 Anesthesia Carve-Out
Sponsor raised priced-up incremental at the dropdown vehicle, outside MFN reach. Reinforced lender insistence on tighter MFN scope at Unrestricted Subs.
In re Serta Simmons — priority-lien uptier
MFN protection did not bite on the uptier exchange because the new paper was structured as a refi rather than a priced-up incremental — illustrates the structural-coverage gap.
Precedents drawn from the public corpus (SEC filings, court opinions, market commentary). Other tenants' uploads are never used as comparables.
Evidence3 clauses
§2.01(e)p. 41
"If at any time prior to the date that is six (6) months after the Closing Date the Borrower incurs any Incremental Term Loan with an All-In Yield exceeding the All-In Yield of the existing Term Loans by more than 50 basis points, the All-In Yield on the existing Term Loans shall automatically be increased to the extent necessary to eliminate such excess."
§2.01(e)(ii)p. 42
"Notwithstanding the foregoing, the MFN adjustment shall not apply to (A) Incremental Term Loans incurred to finance a Permitted Acquisition, (B) Incremental Term Loans incurred under the Senior Secured Leverage Ratio test, or (C) Incremental Term Loans maturing later than the Latest Maturity Date plus six (6) months."
§1.01 — All-In Yieldp. 12
""All-In Yield" means, with respect to any Loan, the sum of (i) the applicable interest rate margin, (ii) any LIBOR or SOFR floor in excess of zero, and (iii) the original issue discount expressed as an annualized percentage based on the four-year amortization assumption."
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