Upfront Fee
Short definition
An upfront fee is paid at signing or first draw and must be spread over the tenor. It does not cut the coupon; it cuts net proceeds and lifts EIR.
Detailed explanation
It may be quoted on the limit or on the draw. The same fee inflates all-in more on a short tenor. IFRS 9 usually folds it into effective interest rather than expensing it at once.
In a syndicate, underwriting and participation fees sit in this family. Refundability is rare.
Why it matters for the CFO
1% upfront on three years is dearer than 1% on ten. Offers cannot be ranked without spreading the fee.
How it is calculated
Yıllıklaştırılmış peşin ücret ≈ Peşin ücret / Vade (yıl) (kaba; EIR daha doğru)
Variables in the formula
- Upfront: Fee paid at signing / limit or draw
How to read it
The same upfront point lifts all-in more on a short tenor. A fee on the limit, not the draw, inflates effective Kd further on a partial draw.
Numerical example
150 mn TL limit, 1.0% upfront = 1.5 mn TL at the door. Rough annual take over 3 years ≈ 0.50 percentage points.
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Definitions are educational. They are not investment, credit or tax advice.