credit enhancement


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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.

References in periodicals archive ?
Securities that are backed by these assets are not guaranteed by the government but generally carry a credit enhancement provided by the private sector, and those securities account for a significant portion of the entire market.
Investors, on the other hand, acquire securities that require no management of the underlying loans on their part and yet provide an attractive return for instruments that pose, depending upon the nature of the credit enhancement, little or no credit risk.
Credit enhancement for the 'AAA' rated class A certificates reflects the 37% credit enhancement provided by the M-1 through M-9 and B certificates, monthly excess interest, and initial over collateralization (OC) of 8.
Credit enhancement for the 'AA' rated class M-4 certificate reflects the 21.
Fitch's review of the CNH transactions noted increasing levels of credit enhancement available to each class of notes.
PMI's credit enhancement products have also enabled a greater number of Australian investors to tap into the international RMBS market.
05% credit enhancement provided by classes M-1 through M-10 certificates, monthly excess interest, and initial over collateralization (OC) of 2.
Credit enhancement for the 'A' rated class M-6 certificates reflects 6.
Credit enhancement for the 'A-' rated class M-6 certificates reflects 6.
Credit enhancement for the 'AAA' class A certificates reflects the 20.
In its review of the CNH transactions, Fitch noted increasing levels of credit enhancement available to each class of notes.
Credit enhancement for the 'AAA' class A-1 and A-2 certificates reflects the 19.