• The risk of prolongation is also associated with debt refinancing, in particular, the interest charged for a new loan will be higher than for the old one.

  • As a rule, the shorter the maturity of the debt, the higher the risk of rollover for the borrower.
  • This risk may also refer to the risk that a derivatives position will become worthless if and when it is rolled over to a new maturity.
  • Rollover risk reflects economic conditions (eg liquidity and credit markets) versus the borrower’s financial health.