A bank offers to syndicate a Eurodollar loan for an MNC$.$ The MNC has a credit risk rating of AA$.$

Loan Type: Bullet

Principal: USD $21$ million

Maturity: $4$ years

Upfront Syndication Fee: $1\mathrm{.}95\%$

Interest Rate: LIBOR $+$ credit risk premium, reset every $6$ months

Current LIBOR$6$: $4\mathrm{.}29\%$

Expected nominal interest rate in the US in $6$ months$$ time: $4\mathrm{.}50\%$

$-----------$

Credit rating $($Premium$)$

AAA $(1\mathrm{.}85\%)$

AA $(2\mathrm{.}15\%)$

A $(2\mathrm{.}75\%)$

BBB $(3\mathrm{.}25\%)$

$----------$

What is the effective annualized interest rate that the MNC has borrowed at for the first $6$ months?

Answer

a$.$

$6\mathrm{.}568\%$

b$.$

$6\mathrm{.}440\%$

c$.$

$6\mathrm{.}262\%$

d$.$

$7\mathrm{.}180\%$

e$.$

None of the options in this question.