Interest Rate

Internal Interest Rate for loans and capitalization of interest costs

In Nordkap, you can indicate that you want to establish an interest base for internal loans, just like STIBOR, for example, is an external interest base used by banks. An internal interest rate can be chosen as the reference rate for a variable loan, and you can decide what to call it.

The loan's interest bindings are then set against this interest rate. It is possible to have more than one internal interest base set up in the system.

To change or adjust the self-defined interest rate in Nordkap, you submit the specified interest rate and the effective date to support@nordkap.se. The possibility to make direct adjustments in the system is not currently available.

This type of solution can be advantageously used when setting up internal loans if the interest rate should reflect the external debt portfolio's loans and interest hedging. For example, one can generate a portfolio report quarterly and observe the average external interest rate, thereby adjusting the internal interest rate to the correct level.

Capitalizing the Interest Cost

Capitalization means that the ongoing interest cost is not paid but instead is added as an increase to the debt. This procedure is common, for example, in the case of an internal loan when there is no actual transaction between the companies.

In the advanced settings, there is a checkbox where you can mark 'Capitalizing Interest Cost' after selecting the interest type.

At each payment occasion, the payments are then replaced by the debt increasing by the corresponding amount.