Borrowing Costs and Capitalization
The costs of borrowing are primarily made up of interest and issuance expenses. The interest rate assigned to a particular debt instrument is based on the level of default risk assumed by the investor. Several rating agencies assess the default risk of public debt issuances and provide a rating that is indicative of credit quality. The credit quality is greater for secured/collateralized senior debt than for unsecured subordinated debt issued by...
Forward Interest Rates
Forward interest rates are interest rates which are specified now for a loan or transaction that will occur at a specified future date. As with current interest rates, forward interest rates include a term structure which shows the different forward rates offered on transactions of different maturities. Forward rates are also known as implied forward rates.