Valuation
- Calibration — Calibration is the step of solving a valuation model so that it reproduces the actual transaction price at origination — Day 1 — and then carrying that solved-for spread forward, adjusting it only on documented evidence that credit quality or market conditions have changed.
- Discount margin — The discount margin is the spread over a floating reference rate that, when added to that rate and used to discount a floating-rate instrument’s expected cashflows, reproduces a given price — the floating-rate analogue of a yield, expressed as a margin rather than an absolute rate.
- Private credit valuation — Private credit valuation is the process of estimating the fair value of privately originated, non-traded debt — direct loans, unitranche facilities, mezzanine and similar positions — that has no continuous market price.
Accounting & fair value
- Exit price — An exit price is the amount you would receive to sell an asset in an orderly transaction at the measurement date — the price to get out of a position, not the price paid to enter it and not what it is carried at on the books.
- Fair value — Fair value is the price you would receive to sell an asset in an orderly transaction between willing market participants at the measurement date — an exit price, not what was paid for it or what the holder hopes to realise.
- Level 3 asset — A Level 3 asset is one whose fair value is measured using significant unobservable inputs — the valuer’s own assumptions, informed by the best available information, rather than quoted market prices.
Credit & risk
- Illiquidity premium — The illiquidity premium is the extra return a holder demands for owning an instrument that cannot be sold quickly or cheaply — compensation for being unable to exit a private position at will, which a freely traded equivalent would not need to offer.
Instruments
- Unitranche loan — A unitranche loan blends what would otherwise be senior and subordinated debt into a single facility, advanced as one tranche at one blended interest rate — a structure common in direct lending because it gives a borrower a single instrument and a single lender relationship.
Governance & independence
- Independent valuation agent — An independent valuation agent is a third party that produces or supports an entity’s marks independently of the manager who holds the assets — bringing a separate model and judgement to the valuation rather than reviewing or recording the manager’s own.
- Valuation committee — A valuation committee is the body that reviews and approves an entity’s marks — it owns the valuation policy, challenges the inputs and overrides behind each mark, and signs off the figures that reach the accounts and LP reporting.
Independent private credit valuation
markst values private credit independently on a published, reproducible methodology — marks an auditor and an LP can read straight through. Request access or book a demo. You can also read the valuation methodology or see Verus, the valuation engine.