U.S. Fed sets the new standard for bridge loan pricing

From time to time, lenders hear a complaint or two about the cost of a loan. Compared to the price of equity, debt is always quite inexpensive, mind you, but consumers would always prefer to pay less than more.

Context is always important, however, when trying to size up your choices. Citibank’s last big issue of bonds went out at 11%, for example, and now we have the U.S. Federal Reserve giving us a major hint about the current cost of money.

The terms of AIG’s secured loan are simple: 11% floating rate coupon (LIBOR plus 850 bps), two year bullet term, 80% “free” equity in the form of warrants called equity participation notes (ie. not warrant coverage, just the phantom stock, thanks).

For good quality North American small to mid cap companies that are looking for growth capital in the form of debt, Wellington Financial’s coupon pricing ranges today from 7.25% to 12.75% depending upon the structure; deal sizes of $2 million to $40 million (latter on a syndicated basis); 6 to 36 month terms. Call Amy Olah, Marketing Manager, at 416-682-6002.

We couldn’t swing the AIG deal, but we have capital available for the rest of you.

MRM