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Long Term Debt Avenues

Debt Finance and Loans Explained, Long Term Debt Avenues »

Firms should match the maturity structure of their assets (that are funded through debt) with the maturity structure of their liabilities (their debts)
Term loans – Banks
Fixed-term loan periods generally range from 3 to 15 years
Typically used ton finance capital expenditure (building equipment)
Interest may be fixed or variable, and depends upon
–      The credit rating of the borrower
–      Term of the loan repayment schedule
Term loans – Investment and Merchant banks
Loans generally do not exceed 5 years
Interest fixed, but usually divided into a series on interest rate review, or roll-over periods
Loan agreement also …

Debt Finance and Loans Explained, Long Term Debt Avenues »

Where possible, a business should match the maturity and repayment schedule of its debt with the cash flow patterns of its investments that are being financed through debt. For investments of a medium-to-longer-term nature, the debt should be of a similar term. There are numerous arrangements and instruments of medium-to-longer-term debt. Such debt may be intermediated finance provided by financial institutions, or it may be direct finance obtained from either the domestic or international capital markets.
The simplest form is the term loan facility, available through banks and money market corporations. …