To set a minimum interest rate correctly, you must take into account market conditions, the risks involved, the company's expected ability to meet its commitments, your expectations and, finally, demand for the opportunity, which may increase competition.
A lower minimum rate increases the chances of being selected without necessarily reducing the return, as the final rate is set by the last investor excluded (cut-off rate). The final interest rate will be higher than the highest minimum interest rate participating in the investment and will therefore almost always be higher than your defined minimum interest rate.
Daskapital advises investors to set their minimum interest rates based on the specific risk of the opportunity. To support investors in this exercise, Daskapital provides a Minimum Indicative Rate (Tmin) based on the Iberinform risk rating.
For more information about Tmin click here.
