Credit Enhancement or Liquidity Facility Provider
Parties providing superior credit to improve the credit quality of a bond issue, and/or funds to the issuer to repurchase bonds that a bondholder may tender.
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Letter of Credit
A commitment, usually issued by a commercial bank, used to guarantee payment of the payment of the Principal and Interest on a Bond Issue provided that the conditions set out in the documentation for the Letter of Credit (often called a Reimbursement Agreement) are satisfied.
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Learn more about the various documents involved in a municipal securities transaction.
See Also
Reimbursement Agreement
A contract typically seen in transactions that involve a letter of credit or a guaranty.
Credit Enhancement
The use of the credit of an entity having greater financial strength than the issuer or borrower to improve the credit quality of a bond issue.
Guaranty
A third party’s promise to pay the debt service on the bonds or perform some other obligation, which is the primary obligation of another party.
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Hundreds of Terms and Concepts
Loan Agreement
In a private placement, the agreement between the issuer and a lender (e.g., a bank) pertaining to the loan of the bond proceeds to the issuer. In conduit financings, the agreement between the borrower and the issuer pertaining to the loan of the bond proceeds to the borrower.