The Optimus Group: Emergency Fed Rate Cut Creates Refinance Opportunity For Corporate Borrowers with Equipment Lease Obligations

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The Emergency Federal Reserve Rate Cut announced earlier this week has created the best opportunity to refinance corporate obligations including equipment leases since the first quarter of 2004.

The Emergency Federal Reserve Rate Cut announced earlier this week has created the best opportunity to refinance corporate obligations including equipment leases since the first quarter of 2004. On Tuesday, the 5-year Treasury Index Rate dropped 30 basis points. SWAP rates, which are typically used to determine lease rates, have dropped almost 200 basis points since their 2Q07 peak, providing corporate borrowers with an immediate window of opportunity to move into lower rate structures.

Equipment leases are often overlooked as obligations to be refinanced. However, with proper structuring, financed equipment could yield significant savings. With the current drop in rates, corporate borrowers could save $50,000 to $150,000 for each $1 million in leased equipment.    

In a research note to clients, The Optimus Group strongly recommended that Corporate Finance and Treasury departments review their equipment finance obligations specifically for equipment acquired during the 24 month period between September 2005 and July 2007. Any equipment purchases including acquisitions of corporate aircraft, fleet additions, heavy equipment, information technology and/or other capital intensive assets should be earmarked for review.        

The Optimus Group (http://www.optimusgroup.com) is an independent financial advisory firm that negotiates with leasing companies and banks on its clients’ behalf. The Optimus Group is NOT a leasing company. In most cases, The Optimus Group, through its expertise in lease/loan contracts, would be able to reduce total lease expenses by at least 10% to 15%. A typical Optimus Group client invests over $5 million in new equipment annually and is the company CFO or Treasurer. For further information, contact Blaine Ung at 949.862.0555 ext. 106 or visit the The Optimus Group website at:
The Optimus Group

Contact: Blaine Ung
Office: 949.862.0555 x106

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