Comment by: Anonymous. Posted 12 years ago [2011-08-19 20:13:42]

This news item invites both an elementary observation and question. The borrower (SABMiller) plans to pay L+90 for the term of the loan. The fact that the banks which extend the loan have funding cost for the same term of twice the spread to LIBOR is worth pondering. But the banks will fund the loan short-term at close to LIBOR-flat (?). Elementary Question: even if banks do have a positive carry by mis-matching the asset and the funding, isn't it clear that banks with high term funding cost simply should not make such a loan?