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Floating rate bond-like loans (FRN)

  • Terms of between one and ten years
    • Fixed margin for the entire life of the loan
  • Floating underlying interest rate
    • No flexibility to make changes to the principal amount or instalment payments during the life of the loan
    • Refinancing requires administrative attention

Floating rate bond-like loans are more suited to organisations that take a more complex approach to debt management than is required with instalment-based loan products. They are best suited to large and diversified loan portfolios managed by employees who have the expertise and capacity to manage the need to repay the principal and arrange refinancing within a defined level of risk.

Municipalities’ internal financial regulations and financial reporting have to be adapted to the greater complexity and there needs to be sufficient alignment between the limits set by the internal financial regulations and the municipality’s expertise in financial management. Municipalities must expect that a higher level of administrative capacity and control will be needed to maintain such a loan portfolio.

Information and terms

Maturity 1 - 10 years
Interest determination Fixed margin linked to NIBOR Fixed margin, 1 - 10 years
Installment Interest only
Fixed interest 3 months
Green interest rate At maturity > 5 years Read more on green rates
Flexible installment structure
Interest calculation 30 / 360 days
Loan termination
Partial payments
KBN charge free
Notification period for interest change
Conversion of fixed product