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Back-to-Back Commitment

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Back-to-Back Commitment
An agreement in which a bank makes a loan for a new construction and an investor promises to buy that loan from the bank at a specified future date. This commitment reduces the risk the bank takes on when it makes a loan. A back-to-back commitment is identical to a take-out commitment, but applies to loans on new constructions, rather than mortgages on existing properties.


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The complexity for some of these projects is significantly increased where the gas project and the power project are likely to be greenfield projects being financed on a non or limited recourse basis, and will be dependent on matching back-to-back commitments to secure their respective revenues.
 
 
 
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