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For those who've been reading this thread with interest, fee is high based on the actuarial valuation for interest rate market volatility for the next 5 year term. Therefore, this is simply a cost of risk management of the financial asset. Client has other similar arrangements where fee is a very sm...

Agree fee is very high but it was agreed by both parties. Unfortunately, the real effect of capitalism takes precedence and financial institutions exploit start-ups.

Thank you all for contributing to this...

Thank you both. I was going to book the fee on the 60 months basis ie proportion this over a 5 year period?
As regards the fee being high, £20m(£4m pa) this is for a max £400+m notional value and agreed by both parties. This works out to be appx 5% which is still high.

Leo and DJP - thank you for your insight. In respect of fees taking it to P&L, should this be expensed on a 'period cost' basis or anything like effective interest method where frontloading is achieved?

Thanks

Interest rate is variable with a fixed component of margin % so in effect a variable rate overall. Thanks for looking into this..

The underlying asset/liability is a liability ie a revolving loan facility obtained by us from a totally different lender.
Thanks

Hi All, I'm having to do the treasury related accounting after a long gap and require assistance from experts here please. WE have taken an IRS with a big fee for a term of 60 months as part of our refinancing condition from the lender on a separate refinancing deal. The IRS is on a pay fix/receive ...