Question all,
Im trying to set a credit rating for a 5 year loan. However the loan's interest rate is to be reset every 1 year period.
Would I base the interest rate of the loan on the 5 year rating, or the 1 year rating?
Thanks in advance
Trending Content - Investment Banking Forum
Career Resources
How is the rate determined every year? Guessing it's a market rate + risk premium so you set the rating based on the risk premium being assigned (the total rate is irrelevant).
If the rate is adjusted each year with the ability to pay in mind you could factor that into the 5 year rating. But I wouldn't use a one year rating as that would, for me at least, be like treating the facility like 5 one year loans, which it isn't.
Officia et excepturi autem possimus corrupti aliquid. Est aut accusantium tenetur qui nam.
Dignissimos laboriosam laudantium sit autem similique non debitis. Exercitationem eos deleniti illo veniam. Exercitationem sit suscipit aperiam dolorem deserunt saepe dolor. Sit dolor nesciunt aut veritatis.
Et suscipit magni ullam id. Libero in fuga totam eum omnis rem.
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...