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credit enhancement

   Also found in: Wikipedia 0.01 sec.
Credit enhancement
The purchase of the financial guarantee of a large insurance company to raise funds. In the context of project financing, the issuance of a guarantee or additional collateral to reinforce the credit strength of a project financing. Also, the reduction of counterparty risk on a swap transaction through such measures as bilateral netting.

credit enhancement
An addition to a bond issue that improves the issue's safety of principal and interest. For example, the purchase of insurance guaranteeing payments on a bond issue is credit enhancement.

credit enhancement

A method of reducing the risk of extending credit to a borrower. It can include requiring collateral,a stand-by letter of credit,a comaker,a guarantor,or any other means.



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The willingness of the sponsor to retain an equity claim on the collateral pool as credit enhancement is largely driven by the structure of the CLO transaction.
Some of the TOBs also have credit enhancement provided by LBHI, which provided the basis for Fitch's long-term rating on the TOBs.
Jupiter's CP is supported by three forms of credit enhancement which includes transaction-specific credit enhancement, JUSI credit enhancement, and programwide credit enhancement.
 
 
 
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