Credit Enhancement
/ˈkrɛdɪt ɪnˈhɑːnsmənt/
Definitions
- (n.) A financial arrangement that improves the credit profile of a loan or security to reduce risk and attract investors.
The company used credit enhancement to secure better terms on its bond issuance.
- (n.) Methods such as guarantees, collateral, insurance, or letters of credit that support debt obligations.
Credit enhancement techniques like third-party guarantees can lower borrowing costs.
Related terms
See also
Commentary
In drafting, specify the type of credit enhancement used to clarify risk allocation.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.