Call Protection In Credit Agreements

Reputational protectionA bond issue function that protects investors from the risk of prepayment. For mortgage-backed bonds, reputational protection can take the form of advance penalties or time limits. A prohibition period is a period beginning from the date of issuance to a later date indicated at which an otherwise called obligation cannot be called. This period is set out in the loan withdrawal agreement. The protection period can be a few months or up to 25 years. For convertible bonds, see Hard Call Protection and Soft Call Protection (for convertible bonds). Suppose today, a corporate loan sponsored with a 4% coupon and a maturity date has now been issued at 15 years. If the first call for borrowing is 10 years and interest rates fall to 3% over the next five years, the issuer cannot call the loan because its investors are protected for 10 years. However, if interest rates fall after 10 years, the borrower has the right to trigger the provision of bond call options. Custodial AgreementA written contract relating to the responsibilities of a custodian owning property.

In the financial field, the custodian holds guarantees on deposits with financial institutions, securities or securities that are the basis of repurchase operations. Call dateThe date when an appeal option can be exercised. The date before the contractual due date at which a loan can be repaid at the issuer`s choice. ContagionThe process (verb) or risk (Noun) was a crisis in a bank, a country, a market or a currency. Regulators are generally concerned about contagion in two directions. Rising contagion occurs when strange problems spread within a financial institution to create systemic problems. Declining contagion occurs when systemic problems cause serious problems for individual banks, which are relatively vulnerable. Call or callMaking claim for payment in the entirety of a loan, usually a loan that is late, often called loan call. Cyclical liquidity riskA kind of systemic liquidity risk. The risk of financing problems resulting from national or regional macroeconomic corrections, such as recessions or credit pressures.

Cash instruments Financial instruments or commodities whose value depends on the maturity, coupon or other characteristics of the instrument itself. Distinguishes derivatives whose value depends in part on the characteristics or prices of an underlying cash instrument. Cash instruments include the U.S. Treasury, agencies and government-sponsored corporate documents; Municipal documents and business documents; Syndicated loans securitized mortgages, car loans and credit card receivables (but no secured mortgage bonds); and bank bonds, such as tradable certificates of deposit and bank assets. Not the same as treasury or treasury market instruments. Unsecured commercial securities, short-term bonds issued by companies for certain amounts and maturities. Companies with lower ratings or no well-known name generally support their business documents with guarantees or bank letters. Commercial paper can be sold on a discount basis or be remunerated. Conditions can be up to 1 day and generally not exceed 270 days.

Community Reinvestment ActA passed federal legislation to require banks and savings and credit associations to cover the credit needs of their municipalities, including low- and middle-income shifts. (2) Adjective: a financial instrument or transaction for which ownership of the financial instrument or merchandise is transferred to or very shortly thereafter, unlike futures transactions in which ownership of the financial instrument or commodity is transferred, if it is transferred later.

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