medium · Debt Capital Markets bond-instruments-structures

Which of the following is a common feature of a bridge loan's pricing structure over time?

1. The interest rate is permanently fixed at the moment of issuance and can never be adjusted by the syndicate of lenders.
2. The interest accrues and is paid by the borrower only in periods when the company's common stock price increases.
3. The interest rate 'steps up' or increases at pre-defined intervals (e.g., every 90 days) until the loan is refinanced.
4. The interest rate ratchets steadily lower every six months as a reward to the borrower for choosing to remain in the loan.

Sign up free to see the explanation and track your rank →