What makes a lender determine/require an interest rate cap to be purchased?
Does it come down to individual policies of each lender? Is it a deal by deal decision? I have heard that some groups do not specifically require it, more of a borrower hedge vs a lender requirement. Just trying to understand the rationale for a lender saying they don't require a cap to be purchased.
Hedge to typically DSCR covenant. Notional can depend on preference of % OPB and tenor. Helps both parties focus on credit in case of IR risk/distress. These days its quite pricy unfortunately
Consequuntur quia accusantium rem tenetur error possimus consectetur. Possimus eius omnis officiis qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...