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Clifford Chance

Clifford Chance

Briefings

Interest payable under the ISDA Master Agreement is a borrowing cost only

6 October 2016

If a party fails to pay a sum due under the ISDA Master Agreement, it must pay interest on that sum.  Interest is calculated by reference to the cost to the payee of funding the relevant amount.  The English High Court has decided that the payee's cost of funding refers only to the interest that the payee would be required to pay if it borrowed the relevant amount.  The payee's cost of equity cannot be included in the calculation.

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