Hi there!
for the sterling eurobond issue, why do we use 4.95% in the interest calculation in appendix 3?
Thought it would be 6.85%. especially since we're sticking to sterling and not swapping it into $.
(To be honest i'm not sure what exactly is 6.85% either - i assume it's the coupon?)
thank you very much!!
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MCTEE 6/05 - Eurobond interest
Also, for (b) sterling fixed rate secured bank term loan,
how do i get the issue of 44.93?
I have seen your other forum (https://opentuition.com/topic/mctee-605/) but i can get neither of the issue 44.93 nor the net (of issue cost) amount of 44.48.
My calculations are 50m / 101% * 100% = giving me a 49.5m issue :(
Thank you!!
8y ago#2First question: They do not have to 'stick to sterling'. It is $'s that they are seeing for the purchase of the gold club, and so if they choose the eurobond it will make sense to swap it and pay lower interest. (And yes, the 6.85% is the coupon rate on the eurobond)
8y ago#3Second question: They need $80M, which at the current exchange rate means they need 80M/1.7985 = 44.48M Pounds.
With an issue cost of 1% it means they will need to borrow 44.48 / 99% = 44.93M
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