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CapitalSource Inc. Message Board

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  • codehead321 codehead321 May 2, 2008 12:38 PM Flag

    8K says new $1B credit is actually a decrease of $400 million

    I think this will be a good deal "for now". When things loosen up a bit, additional credit lines can be neotiated. Now is not the time to haggle too much about the terms. It is more important to have it in place and be able to renegotiate something else later.

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    • If that's true the rate increase is quite high, but the important thing is they secured the money meaning they can continue to lend and probably pass on the increase since much of their competition pulled out of their market. Once they get their deposit base up and running they will have an even better source of money.

      • 1 Reply to MuradB
      • It is a fair observation that the rate has increased from 75 basis points to 200. BUT that does not tell you enough to assess how much CSE is paying. Interest rates have been dropping like a stone. So, as an example, if the prior "basis" was 5%, upon which 75 basis points was added, that could be MORE than if the current basis is 2%, upon which 200 basis points is added. The point is that CSE might actually be paying LESS now despite the new terms.

        I don't know if that's the case -- I'm just pointing out that we don't have enough information. The other piece of information that would be whether CSE's loan to its clients are at fixed rates or are adjustable. I don't know this either. My guess is it's some combination.

 
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