Cost of the Loan

Interest Rates

Kafalat Energy guaranteed loans may be granted in either Lebanese Pounds or US Dollars, or any other convertible Foreign Currency.

Loans taken in Lebanese Pounds will be charged the following interest rate:

Interest Rate = 1-year Treasury Bills Yield (TBY's) + 3%

Loans taken in US Dollars or other foredign Currency will be charged the following interest rate:

Interest Rate = 3% + 50% of FFR (Upper Limit of the Federal Fund Rate)

Subsidy

The interest subsidy is the same for all subsidized loans, currently at 4.5%. The duration of the subsidy is maximum 7 years, beyond which the Central Bank will no longer subsidize the interest.

Kafalat Fee

The Kafalat fee consists of a 2% yearly commission of the outstanding value of the guarantee. The value of the guarantee is 75% of the loan value approved by the bank and Kafalat.

Fiscal stamps are charged once on the Letter of Guarantee and are calculated at 0.4% of the value of the guarantee.

Therefore, the final cost at Letter of Guarantee issuance would be equal to:

[(Loan Value + interest accrued during grace period + interest accrued for 3 months) x 75% x 2%] + [(Loan Value + interest accrued during grace period + interest accrued for 3 months) x 75% x 0.4%]

 

Example

For a loan over 10 years, the interests applied currently (subsidy = 4.5%) are:

 

Year 1 to Year 7

Year 7 to Year 10

Interest paid by Client after Subsidy

0% of loan amount

3.625% of loan amount

If the interest subsidy is lowered to 2.5%, the interests and fees applied will be:

           

Year 1 to Year 7

Year 7 to Year 10

Interest paid by Client after Subsidy

1.125% of loan amount

3.625% of loan amount