Mandatory Costs

A component of the interest charged to a debtor on a LIBOR based floating rate Facility. In addition to LIBOR, the Margin and any increased costs, the debtor has to pay this additional cost which is usually calculated according to a standard formula, suggested by the LMA. The mandatory cost is the additional cost which a creditor incurs based on the amount of their underlying borrowings including supervision fees to the Financial Services Authority and the cost of placing deposits with the Bank of England or the European Central Bank.

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