Finance Deals & Syndicated Lending · glossary
What the borrower pays if it repays in the middle of an interest period and rates have fallen: the lender's loss on re-lending the money for the rest of the period. The margin is left out, so Break Costs never repay lost profit. Definition: Break Costs · Chapter 6
Explained in Chapter 6, Interest, Fees and the Cost of Money, of Finance Deals & Syndicated Lending.
The definition leaves out the margin. The lender loses its profit on the repaid money, but it cannot charge Atlas for that. Break costs repay the funding loss only. That is the bargain behind clause 7.3: Atlas may prepay “without premium or penalty”, but it pays accrued interest and break costs.Read Chapter 6, Interest, Fees and the Cost of Money →
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the amount (if any) by which the interest (excluding Margin) which a Lender would have received on a Loan or overdue amount to the end of the current Interest Period, had it been paid on the last day of that Interest Period, exceeds the return that Lender would earn by placing the amount received early on deposit in the interbank market for the remainder of that Interest Period;Read the definition in the document →
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