Credit enhancement

credit enhancement investment & finance definition
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 - The use of the credit of an entity other than the issuer or obligor to provide additional security in a bond or note financing.

credit enhancement
The use of the credit of a stronger entity to strengthen the credit of a weaker entity in bond or note financing. This term is used in the context of bond insurance, bank facilities and government programs.

Credit enhancement
A credit enhancement is a form of additional protection that may help offset the risk of a debt obligation.

Credit enhancement
Purchase of the financial guarantee of a large insurance company to raise funds.
Credit insurance
Insurance against abnormal losses due to unpaid accounts receivable.

A type of credit enhancement used in certain asset backed securities (ABS).

Change in Credit Enhancement or Other External Support
Item 6.04
Failure to Make a Required Distribution ...

Direct Credit Substitute The Federal Reserve Board's term for a credit enhancement, that is, a means of improving the credit quality of a loan or a bond. dirty price Definition: The quoted bond price, including the accrued interest.

[9] Qualifying payments include mortgage payments of principal or interest, payments on credit enhancement contracts, profits from disposing of mortgages, funds from foreclosure properties, payments for warranty breaches on mortgages, ...

Commercial property includes multi-family, retail, office, etc., They are not standardized so there are a lot of details associated with structure, credit enhancement, diversification, etc., that need to be understood when valuing these instruments.

credit enhancement The process of reducing credit risk by requiring collateral, insurance, or other... credit history A record of an individual's or firm's past borrowing and repaying behavior....

See also: Market, Security, Securities, Issuer, Bonds