Stepped margin - Revision history

imported>Doug Williamson: Classify page.

2022-07-02T11:44:03Z

Classify page.

← Older revision		Revision as of 11:44, 2 July 2022
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	== See also ==		== See also ==
			*[[Basis point]]
			*[[EURIBOR]]
	*[[Margin]]		*[[Margin]]
	*[[EURIBOR]]
	*[[Basis point]]
	*[[Stepped interest]]		*[[Stepped interest]]

			[[Category:Long_term_funding]]
			[[Category:Cash_management]]
			[[Category:Financial_products_and_markets]]
			[[Category:Liquidity_management]]

imported>Doug Williamson: Link with EURIBOR page.

2015-04-08T22:05:48Z

Link with EURIBOR page.

← Older revision		Revision as of 22:05, 8 April 2015
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	== See also ==		== See also ==
	*[[Margin]]		*[[Margin]]
	*[[~~Euro LIBOR~~]]		*[[EURIBOR]]
	*[[Basis point]]		*[[Basis point]]
	*[[Stepped interest]]		*[[Stepped interest]]

imported>Doug Williamson: Create the page. Source: ACT CFF 4.2.2 Bank lending page 8. April 2014.

2015-04-06T18:21:44Z

Create the page. Source: ACT CFF 4.2.2 Bank lending page 8. April 2014.

New page

For loans with longer maturities, the margin may be increased in stages during the term of
the loan.

For example, an eight-year loan could carry a stepped margin as follows:
*EURIBOR + 40 basis points p.a. for the first four years;
*EURIBOR + 50 basis points p.a. for the next two years; and
*EURIBOR + 60 basis points p.a. for the final two years.

This type of structure is designed to reflect increased credit risk with the passage of time
and the expected future credit conditions.

However, the logic is somewhat dubious since
by the time the higher margin comes into effect the remaining life of the loan will be
relatively short.

In practice, stepped margins tend to encourage prepayment and
renegotiation or refinancing of the loan.

== See also ==
*[[Margin]]
*[[Euro LIBOR]]
*[[Basis point]]
*[[Stepped interest]]