average interest rates - bar charts

Calculation Methodology

Since 1988 ECU has managed hundreds of multi-currency loan facilities at over 20 banks, with terms of business that vary and that have evolved over time to meet our clients' and their lending banks' requirements.

The 'Average Interest Rates' bar charts have been created from certains actual foreign exchange transaction data which, subject to the notes below, is consistent with all foreign exchange transactions executed by ECU on all ECU-managed sterling-based loans throughout the period.

The 'Average Interest Rates' charts demonstrate the interest paid on a multi-currency loan facility managed by ECU with interest being charged at 1.75% above the weekly closing 7-day inter-bank cost of funds applicable to the currencies borrowed compared with the cost of borrowing at a Sterling 7-day LIBOR rate plus 1.75% for the periods of time specified in the individual bar charts.

Interest Saving

The 'Interest Saving' is calculated as the difference between the interest which would have been paid on the starting balance of the loan in sterling at a rate of 1.75% above the weekly 7-day inter-bank sterling LIBOR rate, and the interest payable in the currency(ies) in which the loan has been denominated at a rats of 1.75% above the weekly closing 7-day inter-bank LIBOR rate applicable to those currencies. An Interest Saving is shown as positive performance. An Interest Loss is shown as negative performance.

Daily interest is calculated at a rate of 1.75% above the weekly closing 7-day inter-bank interest rates for borrowed money in the relevant currencies divided by 360 for all currencies excpet sterling, which is divided by 365.

Underlying Transaction Data

Some of the historical ECU-managed, multi-currency loan facilities were provided by banks that no longer exist or have been sold or merged. As a result, independent verification of historical data is not always possible. ECU's trading instructions to all banks are identical save only three main respects: (a) the amounts vary from bank to bank; (b) although they are given at the same time, it may not have been possible to instruct or execute with all banks simultaneously; and (c) two of the lending banks that historically provided multi-currency loan facilities to ECU's clients were unable to place debt in more than one currency at a time.

The performance data is based on actual foreign exchange transactions executed for clients at Royal Trust Bank of Canada, who were then taken over by Kleinwort Benson Private Bank and subsequently by Kleinwort Benson (Channel Islands) Ltd. ECU believes this to be representative of the capital and interest rate savings of a £1m multi-currency loan managed by The ECU Group plc over these periods. The trading and performance data of ECU's multi-currency debt management programme is periodically reviewed by independent accountants.

 

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"How to take advantage of overseas interest rates."

The Sunday Telegraph 
November 2006



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