Undrawn Commitment Fee

This problem tests your understanding of revolving credit facilities and how lenders are compensated for making capital available even when the borrower does not use it. In debt and leveraged finance interviews, candidates are often expected to explain the basic economics of a revolver, including the difference between drawn and undrawn balances and why a commitment fee exists on the unused capacity. It also checks whether you can speak clearly about financing terms that affect liquidity, borrowing costs, and lender incentives.