What are you actually paying?
The “rate” usually means the annualized interest coupon on drawn amounts, plus any disclosed fees (facility, legal, custodian) spread over the expected life of the loan. Day-count conventions (30/360 vs actual/360) matter for cash flows. Compare all-in cost, not a headline teaser, against alternatives—each has different collateral, tax, and covenant profiles.
How it works
After collateral eligibility is confirmed, the desk assigns a risk grade or grid-based pricing. Floating structures may tie to a benchmark plus spread; fixed structures lock the coupon for a stated term. Your term sheet and credit agreement are the only authoritative sources—if it is not written there, it is not binding. For tax deductibility questions, see our educational guide and speak with a CPA (we do not provide tax advice).
Key benefits
- Collateral-driven pricing — stronger, more liquid collateral often helps versus unsecured borrowing.
- Structure choice — fixed vs floating can match your rate outlook and cash-flow planning.
- Global programs — funding can be organized to align with multi-currency portfolios where permitted.
Risks or considerations
Rising benchmarks increase floating costs. “Low rate” with aggressive LTV can embed hidden maintenance risk. Prepayment terms vary—break costs may apply. Always model stress cases, not only spot rates.
When this strategy makes sense
- Replace expensive unsecured debt with collateralized pricing when economics justify documentation.
- Lock fixed cost for a known planning horizon.
- Bridge financing while awaiting liquidity from another event—see fast cash.