There is a lot we could explain
about interest rate structures, but here are the main things you need to know:
Not exact matches
I mean we're going to see this continued back and forth between the Fed talking
about raising
interest rates and therefore markets trying to absorb that higher term
structure of
rates, that's going to continue.
This makes sense given how bonds are
structured, but I think many investors miss this point when they worry
about the potential risks from rising
interest rates.
With
interest rates still low and the market for variable annuities slumping fast it's hard to be cheerful
about the immediate future of annuities — except when it comes to
structured VAs.
When and if
interest rates begin to rise, corporates may have the incentive to tilt their capital
structure back to equity, or at least to reduce stock repurchases, which could raise further questions
about stock market valuations.»
As I recall, the American subprime product offered a low
interest rate on the front end as an slippery inducement that was
structured to jump by
about 4 %, not much later on.
And with a single debt consolidation loan to face, there is a single
interest rate that ultimately means less
interest is paid and a single repayment
structure to worry
about.
The term
structure reflects expectations of market participants
about future changes in
interest rates and their assessment of monetary policy conditions.
As I recall, the American subprime product offered a low
interest rate on the front end as an slippery inducement that was
structured to jump by
about 4 %, not much later on.
A 10 to 12 percent
interest -
rate loan commitment from an in - market lender that is well - versed in the project type, realistic
about project reserves and execution, and willing to provide flexibility on
structuring burn - offs for guarantees may yield a far better execution probability for the project than a 9.0 percent
rate loan commitment with soft reserve and guaranty requirements from an out - of - market lender that will accept non-refundable loan due diligence deposits only to fail to close at the time of funding.