CHAPTER 3
Interest and Fees
3.1 INTEREST
Unlike bond indentures or private placement documents, in which interest is nearly always calculated at a fixed rate for the life of the debt, credit agreements exhibit wide variability in pricing. They can (albeit rarely) provide for interest at a fixed rate. More commonly, though, the interest rate under a credit agreement will be floating and normally (in the case of U.S. dollar-denominated loans) is expressed as the sum of (1) a base component, usually either the prime or base rate or the London interbank offered rate (LIBOR, explained more fully in Section 3.1.2), that is reset from time to time, plus (2) a margin that is either fixed for the life of the transaction or subject to change based upon ...
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