Base Rate for Trade Financing
| LIBOR: |
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A fixed rate for a specific term. |
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There is a Libor for 30, 60, 90, 180, 360 days and also for longer terms. |
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Once the rate is agreed there are no modifications during the life of the loan. |
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Given that the bank assumes a debt for the term of the transaction, it is not possible to pre-cancel. If this happens, there is usually a penalty collected to compensate the difference in Treasury. |
| PRIME: |
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Is a floating rate (variable) |
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Can be applied to any term. |
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The total amount of interest to be paid is only known the date of maturity due to the daily fluctuations that have taken place during the period. |
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Is possible to pre-cancel at any moment without penalty. |
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