easy · Debt Capital Markets
What is the primary difference between a voluntary prepayment and a mandatory prepayment?
- Voluntary prepayments must always be made at a premium, whereas mandatory ones are at par.
- Mandatory prepayments only apply to interest, while voluntary ones apply only to principal.
- Mandatory prepayments are required by the credit agreement upon specific events, while voluntary prepayments are at the borrower's discretion.
- Only voluntary prepayments reduce the total debt outstanding on the balance sheet.
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