GP/LPs - Would you buy a rate cap now?

ERGirl's picture
Rank: Senior Chimp | 23

Sponsors/LPs: For a new deal now, would you buy a rate cap on your debt? Why and why not? I feel like rates are so going to be low for the foreseeable future, due to QEs and Central Banks easing.

Comments (4)

Mar 24, 2020

Yes, I'd still buy one if I was in that position. Because of what you mention, they're incredible cheap, so why not be prudent for such a low cost? It's like buying an insurance policy for anything -- you begrudgingly pay the premium but thank God if/when it helps you.

Mar 25, 2020

Also if you're doing any leveraged deals, you're going to have to buy one anyway. The lender will require it.

Mar 25, 2020

Would there be any reason to buy one if you weren't doing leveraged deals?

Mar 25, 2020
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