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Petrol Ibrico, a European gas company, is borrowing $650,000,000 via a syndicated eurocredit for six years at 120 basis points over LIBOR. LIBOR for the
Petrol Ibrico, a European gas company, is borrowing $650,000,000 via a syndicated eurocredit for six years at 120 basis points over LIBOR. LIBOR for the loan will be reset every six months. The funds will be provided by a syndicate of eight leading investment bankers, which will charge up-front fees totaling 1.1% of the principal amount. What is the effective interest cost for the first year if the annual LIBOR is 3.80% during the first six months and 4.00% during the second six months.
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