Showing posts with label Front-loaded. Show all posts
Showing posts with label Front-loaded. Show all posts

Friday 28 June 2019

Gulf News Reports on UAB's Front-Loaded Loan - Stumping AA

AA's Brother Stumped Again But a Completely 
Different Situation than AA

Under the headline  "UAB front-loads syndicated term loan to $195m" the GCC's newspaper of record, Gulf News reported that
United Arab Bank said it has concluded of its $195 million 2-year syndicated term loan facility, 30 per cent more than the original planned amount of $150 million.
AA is familiar with the term “upsize” used in situations like this.
Front-load generally refers to the paying of fees at inception of a deal or a pattern of interest payments that are initially greater than principal payments.  
For example, a “load” on an investment fund that one pays up front as the price of entry to the fund.  If the load is 2% and you give the investment fund manager USD 100, you actually only invest USD 98.  As an aside, you should avoid funds with front-end loads, unless of course you’re dealing with Bernie Madoff.
The other case is where payments for interest are front-loaded.  
For example, a fixed-rate mortgage where most of the amount of the initial repayments the borrower makes go to paying interest and not reducing principal.
Does the term “front-load” have a different meaning in GCC?  If so, what term is used for the front loaded examples given by AA?