Clients interest rate agreed on Loans incl. the Costs of funds for the Bank and the Margin. This should reflect the Borrowers risk (usually derived per internal Bank rating scale and transformed into Probability of Default) and received collateral for this financing (materialized through Loss-given Default). The Margin is main element for generating the interest […]
period given by the credit contract to avoid the potential Event of Default, after breach of the covenants or missed scheduled installment took place. Each credit contract should contain such stipulation that Borrower has additional period either to deliver payments from Installment schedule or to fix breached covenant (e.g. Solvency ratio may be improved via […]
Reverse repurchase agreements (reverse repos) are transactions in which an institution lends cash in exchange for financial assets sold by the owner of the financial assets at a given price under a commitment by the owner of the financial assets to repurchase the same (or identical) assets at a fixed price on a specified future […]
an alternative to Commercial Papers/Bonds typically placed on German capital market, which are not traded on public market and the Issuer does not need to have external rating, as each Subscriber like Bank, Investment fund or Asset Manager makes its own credit assessment with regard to the quality of Issuer. In addition, the Issuer protocol […]
Special Purpose vehicle/company, this term is usually used for companies that do not have regular business activities, but they were established for certain purpose like construction and renting the commercial real estate. This is in favor of their Creditors, because this helps to fully ring-fence the transaction via creating the mortgage, pledging the trade receivables […]
The Bank for International Settlements (BIS) is an international organization which was formed in 1930 with the objective of serving the Central Banks of various nations, aiding them to develop an environment of monetary and financial stability via concerted efforts to bring about International co-operation. The Bank for International Settlements popularly termed as “Bank for […]
Traders buy and sell financial products. As a result they often have positions or exposures. These exposures can arise because they are speculating or they have simply hedged against the other side of trade with client. Whatever the reason as prices move the market value of these positions will change.This means that movements in foreign […]
the Borrower should approach Bank to accept the breach of covenants and other stipulations from credit agreement (financial covenant etc.) and to continue in financing relationship under normal conditions. This is prerequisite not to face an Event of default and thus triggering Cross-default under other credit contracts. In case of syndicated deals, participating banks are […]