Loan Pricing
Short definition
Loan pricing combines a reference rate, a credit margin and fees into an all-in cost. The policy rate is not the commercial loan price; bank funding, risk, capital and competition add a margin.
Detailed explanation
Price is a TLREF/SOFR-type reference + credit spread + upfront, commitment and arrangement fees spread over the tenor. Collateral, tenor, amortisation and covenant tightness move the spread. An RCF, a term loan and an L/C are priced separately in the same name.
When the policy rate falls, commercial loan rates can lag or not fall; credit standards cut quantity, not price. All-in is a wider decision than the coupon line.
Why it matters for the CFO
Kd in WACC, the interest budget and debt capacity are born here. Treating the margin as “small” and ignoring fees understates effective cost.
How it is calculated
All-in ≈ Referans faiz + Kredi marjı + Ücretlerin vade payı
Variables in the formula
- All-in: Reference + margin + annualised fees
How to read it
All-in − reference = credit spread + fee take. A tighter spread is credit quality or competition; a wider spread is risk or funding stress. There is no universal cheap/expensive line.
Numerical example
TLREF 45%, margin 600 bp, 1% upfront, 3-year tenor: all-in ≈ 45% + 6% + 1%/3 ≈ 51.3% (simple; compounding and the draw profile change it).
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.