(Difference between pages)
imported>Doug Williamson |
imported>Doug Williamson |
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| 1. ''Facility''.
| | A clause in a loan document which links the pricing of the borrowing to the credit rating of the borrower. |
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| An overdraft facility is a line of credit which is applied to a current account and may be drawn on demand.
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| It is also known as a demand loan, as it is repayable to the bank on demand by the bank.
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| For this reason, it is risky to use overdrafts for core financing needs.
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| 2. ''Liabilities.''
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| The amount by which an account is overdrawn.
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| Also known as an overdraft balance.
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| :<span style="color:#4B0082">'''''Example: Overdraft'''''</span>
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| :We have an overdraft of £50k at the start of April. In other words we owe £50k to the bank.
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| :We need to put more money into our account.
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| :Now we deposit £60k into the account during the month of April.
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| :This repays our overdraft, with some cash left over.
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| :At the end of April, our bank account now has a positive amount in it, of:
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| ::-50 + 60 = 10k
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| :We now have £10k cash in our bank account at the end of April.
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| :The situation of a positive amount in the bank is known as cash at bank (or being 'in credit').
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| | Also known as a 'ratchet'. |
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| == See also == | | == See also == |
| * [[Balance]] | | * [[Credit rating]] |
| * [[Bridge financing]] | | * [[Ratings trigger]] |
| * [[Concentrate]] | | * [[Rating grid]] |
| * [[Facility]]
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| * [[Liabilities]]
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| * [[Overdrawn]]
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| * [[Revolving credit facility]]
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| * [[Round tripping]]
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| [[Category:Liquidity_management]] | | [[Category:Treasury_operations_infrastructure]] |
Revision as of 16:34, 25 July 2015
A clause in a loan document which links the pricing of the borrowing to the credit rating of the borrower.
Also known as a 'ratchet'.
See also
