Inversion and Material adverse effect: Difference between pages

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imported>Doug Williamson
m (Spacing 22/8/13)
 
imported>Doug Williamson
(Create the page. Source: ACT CFF Reading 4.3.1 p14, Documentation 1 April 2014.)
 
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1.
(MAE).  


A term used in foreign exchange rate quotation.
A clause in a loan agreement.


Consider the historical FX quote of 1 GBP = USD 1.4598 - 1.4602.
It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.


The base currency is GBP.


The inversion of this FX quote means expressing the same price, but with the other currency as the base currency (USD here).
== See also ==
* [[Event of default]]
* [[Loan agreement]]
* [[Material adverse change]]


So 1 USD = GBP [1/1.4602] - [1/1.4598]
[[Category:Bank_Lending]]
 
[[Category:Debt_Capital_Markets]]
1 USD = GBP 0.6848 - 0.6850.
[[Category:Legal_Documentation]]
 
 
2.
 
In any market, the reversal of a normal - or commonly expected - relationship.
 
For example the situation of an Inverse yield curve, where longer maturities of funds are trading at LOWER yields than shorter-dated maturities (being the opposite of the normally expected upward-sloping relationship).
 
 
== See also ==
* [[Base currency]]
* [[Foreign exchange]]
* [[Inverse quote]]
* [[Inverse yield curve]]

Revision as of 17:23, 13 June 2014

(MAE).

A clause in a loan agreement.

It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.


See also

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