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GLOSSARY

Balloon payment definition

Published by a LexisNexis Corporate expert

What does Balloon payment mean?

A final payment on a debt that is much larger than the preceding payments due to holding back most of the debt and paying it only towards the end of the agreement. The name comes from the fact that the debt becomes inflated like a balloon as a result of the interest'>compound interest accumulating on the large sum. Balloon payments can also be called partially or amortised loans.

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Repayment, prepayment and cancellation provisions in project finance facilities agreements

Repayment, prepayment and cancellation provisions in project finance facilities agreements Where a facility is committed, exactly how and when the facility is to be repaid will be set out in the facility agreement (ie terms of repayment). Committed facility agreements will normally also state: • whether or not the borrower is allowed to repay the facility prior to the set repayment date(s) (ie make a voluntary prepayment), together with any parameters relating to such prepayments such as minimum amounts or fees which must be paid, and • whether there are any events that require the borrower to repay all or part of the facility early (ie make a mandatory prepayment) Financing for a project finance transaction will typically be by way of senior debt usually consisting of a development term loan facility to be used to fund the development and/or construction costs for the project. This Practice Note explains the types of: • repayment provisions • prepayment provisions, and • cancellation provisions that can typically be found in a project...

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