Summary
Visa Inc. (V) reported on November 19, 2007, the entry into a new 364-day Revolving Credit Agreement by Visa International on November 15, 2007. This agreement supersedes the prior 2006 Credit Agreement and provides a total commitment of U.S.$2.25 billion. The credit facility is unsecured and can be drawn in multiple currencies or U.S. dollars, with interest rates tied to benchmark rates plus a margin.
Key Highlights
- 1Visa International entered into a new U.S.$2.25 billion 364-day Revolving Credit Agreement on November 15, 2007.
- 2The new credit facility replaces the previous 364-day Revolving Credit Agreement dated November 20, 2006.
- 3The agreement is unsecured and includes two tranches: a U.S.$1.91 billion multi-currency tranche and a U.S.$340 million U.S. dollar tranche.
- 4Interest rates are variable, based on either the federal funds rate plus 0.5% or the Bank of America prime rate for base rate loans, or LIBOR plus a margin for eurocurrency loans.
- 5Proceeds can be used for refinancing, ensuring settlement integrity, backing commercial paper programs, and general corporate purposes.
- 6Visa Inc. has the option to assume the borrower's obligations and liabilities under the agreement, releasing Visa International.
- 7The agreement contains standard covenants, including events of default, conditions precedent, and representations and warranties.
Frequently Asked Questions
The credit agreement serves multiple purposes, including refinancing the prior credit agreement, ensuring the integrity of Visa's settlement process in case of member failures, acting as a backup for any commercial paper program, and for general corporate purposes.
The total commitment amount is U.S.$2.25 billion. It is structured into two tranches: a U.S.$1.91 billion multi-currency tranche and a U.S.$340 million U.S. dollar tranche.
Interest rates are variable. For base rate loans (U.S. dollars only), the rate is the higher of the federal funds rate plus 0.5% or the Bank of America prime rate. For eurocurrency loans, the rate is LIBOR plus a margin of 0.16% to 0.22%, depending on Visa International's credit rating.
Yes, the agreement allows Visa Inc. to assume the obligations and liabilities of Visa International as the borrower, and subsequently release Visa International from those obligations. This can be done at Visa Inc.'s option, provided no default has occurred.