Ratchet and Real exchange rate: Difference between pages

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1. ''Loan documentation - pricing - credit risk - credit ratings.''
The value of a currency in terms of real purchasing power.  


A clause in a loan document which links the pricing of the borrowing to the credit rating of the borrower.


Also known as a 'pricing grid'.
It is calculated by comparing the price of a hypothetical market basket of goods in two different countries, translated into the same currency at the prevailing exchange rate.


 
It is useful in measuring the price competitiveness of domestic goods in international markets.
2.  ''Loan documentation - pricing - ESG - KPIs.''
 
A clause in a loan document which links the pricing of the borrowing to the borrower's performance against ESG performance KPIs.
 
 
:<span style="color:#4B0082">'''''Places for People's (PfP's) £900m ESG-linked RCF'''''</span>
 
:"PfP agreed on three meaningful and stretching environmental and social KPIs aligned with four of the UN Sustainable Development Goals.
 
:These are documented in line with the LMA’s Sustainability-Linked Loan Principles with performance tied to upward and downward margin ratchets."
 
:''ACT Deals of the Year 2022: Overall winner - 4 April 2023.''




== See also ==
== See also ==
* [[Clause]]
* [[Currency]]
* [[Credit rating]]
* [[Exchange rate]]
* [[Credit risk]]
* [[Real]]
* [[Documentation]]
* [[ESG]]
* [[Key performance indicator]]  (KPI)
* [[Loan agreement]]
* [[Loan Market Association]]  (LMA)
* [[Margin]]
* [[Revolving credit facility]]  (RCF)
* [[Sustainability-Linked Loan Principles]]  (SLLPs)
* [[Sustainable Development Goals]]  (SGDs)


[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Latest revision as of 23:46, 11 March 2023

The value of a currency in terms of real purchasing power.


It is calculated by comparing the price of a hypothetical market basket of goods in two different countries, translated into the same currency at the prevailing exchange rate.

It is useful in measuring the price competitiveness of domestic goods in international markets.


See also