TOXIC LOANS

A toxic loan is a structured loan that ends up against the borrower.

Indeed, if all toxic loans are structured loans, all structured loans are not toxic.

A structured loan is a variable rate loan whose interest rate varies according to the financial index on which it is indexed (unlike the fixed rate which is set once and for all).

It is said to be "structured" because it includes several periods.

- a first period called "subsidized rate" whose interest rate is very low (this was even 0% at the time!)

- a second period whose interest rate is indexed to a more or less complex formula (generally incomprehensible to ordinary mortals).

For example, the interest rate can be indexed to the Euro- Swiss Franc parity .

As the WAT$ is not convertible and the credits are at the 1% fixed rate imposed by the FMU, the risks of rate variation no longer exist.