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

A guarantee and reserve account provide credit enhancement.

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A debt security through which an investor lends money to an issuer in return for promised payments.

The government, company, or organisation that creates and sells a security.

The principal amount stated on a bond and usually repaid at maturity.

A short-term government debt instrument usually issued at a discount and repaid at face value.

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