Fixed Income
Credit Enhancement
Definition
What is Credit Enhancement?
A feature that improves a debt instrument's ability to absorb losses or make promised payments.
Example in practice
How This Looks in Practice
A guaranteeA contractual promise by another party to meet an obligation if the primary debtor does not. and reserve account provide credit enhancement.
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Related Terms
Fixed Income
Bond
A debt security through which an investor lends money to an issuer in return for promised payments.
Fixed IncomeIssuer
The government, company, or organisation that creates and sells a security.
Fixed IncomeFace Value
The principal amount stated on a bond and usually repaid at maturity.
Money MarketsTreasury Bill
A short-term government debt instrument usually issued at a discount and repaid at face value.