Rate Shock
Short definition
A rate shock is a short-window move in policy, market or credit spread that shifts debt service and the discount rate. Floating loans and the maturity wall are two separate doors.
Detailed explanation
Reset hits 13-week cash; refinancing hits all-in at the wall. A spread shock arrives with policy unchanged (credit conditions).
WACC and NPV raise the hurdle with the shock. An IRS margin call is the cash face of the hedge.
Why it matters for the CFO
In a high-rate regime a small extra shock can push DSCR below 1. A budget that assumed “rates fixed” breaks.
How to read it
The shock may not be a parallel +bp. Loan margin and basis matter as much as policy.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.