A make-whole changes the exercise profile of an option-like prepayment right.
Move the selected terms to see how a simplified teaching model allocates the call estimate across the make-whole and callable years. The output is not a market price, trading mark or recommendation.
Pre-set structures
Market
Assume credit tightens this much by the first call date — the move that makes the borrower’s refinancing option valuable. Most of that value should still sit after first call.
Embedded-call teaching estimate
Under the selected assumptions, the prepayment-right teaching estimate is 10.7 points of par, with 100% attributed to the callable years. This is not a market price or trading conclusion.
Redemption-price schedulemake-whole call schedule
years from issue; price (% of par)
Modeled call sensitivity by windowteaching estimate by exercise window
Input sensitivitiestotal teaching estimate, pts of par
Illustrative teaching model — full methodology here. A Hull-White one-factor short-rate model on a trinomial tree, fitted to the selected initial risk-free curve by construction. Credit is a constant-spread input with an optional tightening scenario. Every numerical output is an assumption-dependent teaching estimate, not a market price or trading mark. The tool ignores default/recovery, call frictions, transaction-specific strategy and the full coupon/calendar conventions.
Go deeper. Request controlled access to the complete Covenants Bible or read the public nine-part LevFin Book condensed edition.
The full framework — why a builder basket is a path-dependent call, an equity cure a knock-in, a make-whole an American call with a stepping strike — is Part VII of the LevFin Book. See also the tool methodology page for the model, variables and worked example.