Jurisdiction(s):
United Kingdom

Key definition

Interest definition

What does Interest mean? Interest is the additional sum payable for the time‑value of money: the amount a borrower pays a lender for using money, the return on debt‑type investments, and the sum awarded for being kept out of funds in litigation. Entitlement arises by: - Contract (contractual interest), including default interest, fixed or floating rates (for example, over base rate or SONIA), and simple or compound interest. Clauses must be clearly drafted and not operate as an unlawful penalty or unfair term. - Statute (statutory interest), for example late payment interest on commercial debts under the Late Payment of Commercial Debts (Interest) Act...

LMA LIBOR-based interest provisions: screen rate calculation and fallbacks, intra-day refixing policies, zero floors, confidentiality, and Replacement of Screen Rate amendments [Archived]

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Practice notes

ARCHIVED: This Practice Note has been archived and is not maintained.

This archived Practice Note is no longer updated. It outlines the Loan Market Association (LMA)’s method for calculating Interest in its LIBOR-based facility documentation. It reviews the interest calculation clause—covering margin, the London Interbank Offered Rate (LIBOR), the Euro Interbank Offered Rate (EURIBOR) or another benchmark, plus mandatory costs—before concentrating on how the benchmark rate (such as LIBOR) is derived.

How LMA documents define and compute LIBOR, EURIBOR or an alternative benchmark, including calculation of the Screen Rate—see Definition of LIBOR, EURIBOR and Benchmark Rate in LMA documents and Definition of Screen Rate in LMA documents
Drafting implications of ICE Benchmark Administration Limited assuming responsibility for administering LIBOR
Drafting effects of the ICE LIBOR Error Policy and the Euribor Intraday Refixing Policy, which set out refixing and republication of LIBOR and EURIBOR respectively—see Intra-day correction, recalculation or republication of a Screen Rate
The fallback waterfall where the Screen Rate is unavailable for a given currency or tenor—see Changes to the calculation of interest
Definitions and provisions relating to the fallback waterfall, including Interpolated...

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Web page updated on 22/05/2026

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