Repurchase Price

The “Repurchase Price” is the amount paid by the Seller to the Buyer on the “Repurchase Date”.  Any failure to do so constitutes an Event of Default for the purposes of the GMRA. 

It is easiest to think of the “Repurchase Price” in terms of a loan transaction.  In these circumstances, the “Repurchase Price” would be the TOTAL amount to be repaid when the ‘loan’ comes to an end.  In other words, the “Repurchase Price” is the amount originally ‘borrowed’ PLUS any ‘interest’ that has accrued.

The “Repurchase Price” is not actually stated anywhere within the GMRA.  Instead, it is a calculated value.  It is calculated by ADDING the “Purchase Price” and the “Price Differential” (in other words, the ‘amount of the loan’ PLUS the ‘amount of interest’ that has accrued up until the date of calculation).  In other words, the “Repurchase Price” is equal to:

RP = PP + PD

where:

RP is the “Repurchase Price”

PP is the “Purchase Price”

PD is the “Price Differential” (as at the date of calculation).

It is important to emphasise that the “Repurchase Price” is calculated on every date during the life of a Repurchase Transaction – not just at maturity.  This is because the “Repurchase Price” is one of the inputs used in producing the daily “Transaction Exposure” calculation.  The “Repurchase Price” is also calculated on any early termination of a transaction (or the GMRA more generally).

Contact Us