CALCULATION METHODS

What information do we need to quote pricing?

• 1. Name and Country of the B/E, P/N avalising or L/C issuing/confirming bank
• 2. Currency and amount of the transaction
• 3. Repayment period and structure
• 4. Type of Transaction (goods involved, shipment date planned etc)
• 5. Envisaged date of discounting

What does our prices consist of?

1. The Discount Rate: 
   •       Libor: Currency and maturity matching London Inter-Bank Offered Rates
   •       Spread: Calculated depending on the risk involved, tenor, currency and the amount involved of the transaction
2. Days of Grace : Calculated to reimburse Credit Europe Bank N.V. for any delays anticipated in collecting receivables in the obligor’s country
3. Commitment fee : Calculated over the face value of the transaction from the date of the acceptance of  a firm offer to discount the transaction until the actual date of discounting.

Discount Calculations

Credit Europe Bank N.V. uses two main discounting methods

• Straight Discount: Expresses the discount rate as a percentage discounted from the face value given the life of the specific maturity or maturities.

• Discount to Yield: Expresses the discount rate as a true interest cost, on a per annum basis. The Discount to Yield calculation is the yield a present value will achieve as it reaches its future value (face value) at maturity.

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