Coronavirus crisis and Lenders Option Borrowers Option: Difference between pages

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''Business continuity - pandemic.''
(LOBO).




The effects of the Coronavirus disease on all aspects of human society including the financial and business community.
A long term borrowing instrument with periodic interest re-fixings, which incorporates two linked options:


#An option for the lender to set revised (usually higher) interest rates at predetermined interest reset dates - for example annually. This is the Lender's option.
#A linked option for the borrower (exercisable only if the Lender’s option is exercised) either to pay the revised interest rate, or else to redeem the bond. This is the Borrower’s option. 


The WHO declared Coronavirus disease a pandemic on 11 March 2020.


LOBOs have been issued for maturities of up to 50 years.


Each of the two embedded options can be complex to value with precision, potentially making the composite borrowing instrument difficult for some less sophisticated borrowers to evaluate.


==See also==
*[[Business continuity plan]]
*[[Contingency plan]]
*[[COPD]]
*[[Coronavirus]]
*[[Coronavirus Business Interruption Loan Scheme]]
*[[Disaster recovery planning]]
*[[Epidemic]]
*[[Financial stability]]
*[[Liquidity management]]
*[[Lockdown]]
*[[Pandemic]]
*[[SARS-CoV-2]]
*[[WFH]]


Also written 'Lender's Option Borrower's Option'.


==Resources for COVID-19==
[https://www.treasurers.org/hub/technical/covid19 ACT technical - COVID-19]


[https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses UK government: support for businesses]
== See also ==
* [[Interest]]
* [[Option]]


[https://www.gov.uk/coronavirus UK government: COVID-19 support hub]
[[Category:Long_term_funding]]

Latest revision as of 22:07, 7 October 2018

(LOBO).


A long term borrowing instrument with periodic interest re-fixings, which incorporates two linked options:

  1. An option for the lender to set revised (usually higher) interest rates at predetermined interest reset dates - for example annually. This is the Lender's option.
  2. A linked option for the borrower (exercisable only if the Lender’s option is exercised) either to pay the revised interest rate, or else to redeem the bond. This is the Borrower’s option.


LOBOs have been issued for maturities of up to 50 years.

Each of the two embedded options can be complex to value with precision, potentially making the composite borrowing instrument difficult for some less sophisticated borrowers to evaluate.


Also written 'Lender's Option Borrower's Option'.


See also