Backup Line of Credit

Backup Line of Credit

A bank assurance of funds obtained by an issuer of commercial paper to protect the CP investor from default. The issuer pays a commitment fee to the bank.

Backup Line of Credit

A bank's guarantee of an issuer's commercial paper. Commercial paper is a short-term, unsecured debt security usually issued by a company with a very high credit rating. As a result, commercial paper is very low-risk. The backup line provides additional security for the paper, but usually does not provide credit for the full value of the paper. The issuer pays a fee to the bank for the backup line.
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Getting paid eight [basis points] for a backup line of credit - that's no way to make a living," moans Shufeldt at SunTrust.
The commercial paper program is supported by a $225 million backup line of credit.
OPC has sufficient liquidity, with a backup line of credit of $450 million that expires in July of 2012.