Yield

Yield — the broadest measure of what a note investment actually earns for the investor. While a note's stated interest rate (coupon rate) tells you what the borrower pays, yield reflects what the investor receives based on the price paid. Buying a note at a discount to its unpaid principal balance increases yield above the coupon rate; paying a premium reduces it.

In the secondary note market, yield is the common language for comparing opportunities across different note types, lien positions, and risk profiles. A performing first-lien note purchased at a small discount might yield 8-12%, while a non-performing second-lien note bought at a steep discount could target yields of 15-25% or higher if the investor's workout strategy succeeds. Investors should be clear about which yield metric they are using — current yield, yield to maturity, or IRR — since each captures different aspects of return and can produce meaningfully different numbers for the same note.