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Restrictive covenants |
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Definition of Restrictive covenantsRestrictive covenantsProvisions that place constraints on the operations of borrowers, such as restrictions on
Related Terms:CovenantsProvisions in a bond indenture or preferred stock agreement that require the bond or preferred Loan CovenantsExpress stipulations included in loan agreements that are designed to monitor Negative Loan CovenantsLoan covenants designed to limit a corporate borrower's behavior Positive Loan CovenantsLoan covenants expressing minimum and maximum financial measures CovenantsPromise usually made in a contract whereby a party to the contract promises to do or not to do specified things. Financial CovenantsA promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism. Back-to-back loanA loan in which two companies in separate countries borrow each other's currency for a Broker loan rateRelated: Call money rate. Builder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the Bullet loanA bank term loan that calls for no amortization. Dealer loanOvernight, collateralized loan made to a dealer financing his position by borrowing from a Equivalent loanGiven the after-tax stream associated with a lease, the maximum amount of conventional Federal Home Loan BanksThe institutions that regulate and lend to savings and loan associations. The Fixed-rate loanA loan on which the rate paid by the borrower is fixed for the life of the loan. Freddie Mac (Federal Home Loan Mortgage Corporation)A Congressionally chartered corporation that Intercompany loanloan made by one unit of a corporation to another unit of the same corporation. Inventory loanA secured short-term loan to purchase inventory. The three basic forms are a blanket Jumbo loanloans of $1 billion or more. Or, loans that exceed the statutory size limit eligible for purchase or Loan amortization scheduleThe schedule for repaying the interest and principal on a loan. Loan syndicationGroup of banks sharing a loan. See: syndicate. Loan valueThe amount a policyholder may borrow against a whole life insurance policy at the interest rate Multicurrency loansGive the borrower the possibility of drawing a loan in different currencies. Multifamily loansloans usually represented by conventional mortgages on multi-family rental apartments. Parallel loanA process whereby two companies in different countries borrow each other's currency for a Project loan certificate (PLC)A primary program of Ginnie Mae for securitizing FHA-insured and coinsured Project loan securitiesSecurities backed by a variety of FHA-insured loan types - primarily multi-family Project loansUsually FHA-insured and HUD-guaranteed mortgages on multiple-family housing complexes, Savings and Loan associationNational- or state-chartered institution that accepts savings deposits and Self-liquidating loanloan to finance current assets, The sale of the current assets provides the cash to repay Term loanA bank loan, typically with a floating interest rate, for a specified amount that matures in between Transaction loanA loan extended by a bank for a specific purpose. In contrast, lines of credit and revolving Variable rate loanloan made at an interest rate that fluctuates based on a base interest rate such as the Loans payableAmounts that have been loaned to the company and that it still owes. Negative Loan Covenantsloan covenants designed to limit a corporate borrower's behavior Positive Loan Covenantsloan covenants expressing minimum and maximum financial measures Bridge LoanA short term loan to cover the immediate cash requirements until permanent financing is received. Demand LoanA loan which must be repaid in full on demand. Farm Improvement and Marketing Cooperatives Loans ActSee here Fixed Rate Loanloan for a fixed period of time with a fixed interest rate for the life of the loan. Loan CapitalBorrowed funds having a fixed interest rate. Operating LoanA loan advanced under an operating line of credit. Term LoanA secured loan made to business concerns for a specific period (normally three to ten years). It is repaid with interest, usually with periodical payments. personal loanA lump sum that you borrow from a financial institution for a specified period of time. To repay the loan, you pay interest on the entire lump sum, and make payments on a scheduled basis. secured loan or line of creditA lump sum of funds (loan), or a revolving source of credit with a pre-established limit (line of credit), for which the customer must provide collateral. Commercial Business Loan (Credit Insurance)An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes. Agency bankA form of organization commonly used by foreign banks to enter the U.S. market. An agency Agency pass-throughsMortgage pass-through securities whose principal and interest payments are AmortizationThe repayment of a loan by installments. ARMAdjustable rate mortgage. A mortgage that features predetermined adjustments of the loan interest rate Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts Back officeBrokerage house clerical operations that support, but do not include, the trading of stocks and Back-to-back financingAn intercompany loan channeled through a bank. Balloon maturityAny large principal payment due at maturity for a bond or loan with or without a a sinking Blanket inventory lienA secured loan that gives the lender a lien against all the borrower's inventories. BondBonds are debt and are issued for a period of more than one year. The U.S. government, local BorrowTo obtain or receive money on loan with the promise or understanding that it will be repaid. Borrower falloutIn the mortgage pipeline, the risk that prospective borrowers of loans committed to be BuydownsMortgages in which monthly payments consist of principal and interest, with portions of these Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance Cash budgetA forecasted summary of a firm's expected cash inflows and cash outflows as well as its Cash and carryPurchase of a security and simultaneous sale of a future, with the balance being financed Compensating balanceAn excess balance that is left in a bank to provide indirect compensation for loans Consortium banksA merchant banking subsidiary set up by several banks that may or may not be of the Conventional mortgageA loan based on the credit of the borrower and on the collateral for the mortgage. Country risk GeneralLevel of political and economic uncertainty in a country affecting the value of loans or CreditMoney loaned. Debt reliefReducing the principal and/or interest payments on LDC loans. Debt securitiesIOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and Defined contribution planA pension plan in which the sponsor is responsible only for making specified EurobankA bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans. EurocreditsIntermediate-term loans of Eurocurrencies made by banking syndicates to corporate and Fallout riskA type of mortgage pipeline risk that is generally created when the terms of the loan to be Federal agency securitiesSecurities issued by corporations and agencies created by the U.S. government, Federal funds rateThis is the interest rate that banks with excess reserves at a Federal Reserve district bank FHA prepayment experienceThe percentage of loans in a pool of mortgages outstanding at the origination Financial distressEvents preceding and including bankruptcy, such as violation of loan contracts. Foreign banking marketThat portion of domestic bank loans supplied to foreigners for use abroad. Forward interest rateInterest rate fixed today on a loan to be made at some future date. Forward saleA method for hedging price risk which involves an agreement between a lender and an investor GEMs (growing-equity mortgages)Mortgages in which annual increases in monthly payments are used to GMCs (guaranteed mortgage certificates)First issued by Freddie Mac in 1975, GMCs, like PCs, represent Government sponsored enterprisesPrivately owned, publicly chartered entities, such as the Student loan Graduated-payment mortgages (GPMs)A type of stepped-payment loan in which the borrower's payments Highly leveraged transaction (HLT)Bank loan to a highly leveraged firm. International Bank for Reconstruction and Development - IBRD or World BankInternational Bank for Reconstruction and Development makes loans at nearly conventional terms to countries for projects of high Investor falloutIn the mortgage pipeline, risk that occurs when the originator commits loan terms to the Leveraged buyout (LBO)A transaction used for taking a public corporation private financed through the use Line of credit An informal arrangement between a bank and a customer establishing a maximum loan Lock-outWith PAC bond CMO classes, the period before the PAC sinking fund becomes effective. With Line of creditAn informal arrangement between a bank and a customer establishing a maximum loan Manufactured housing securities (MHSs)loans on manufactured homes - that is, factory-built or MarginThis allows investors to buy securities by borrowing money from a broker. The margin is the Margin account (Stocks)A leverageable account in which stocks can be purchased for a combination of Market clearingTotal demand for loans by borrowers equals total supply of loans from lenders. The market, Match fundA bank is said to match fund a loan or other asset when it does so by buying (taking) a deposit of MortgageA loan secured by the collateral of some specified real estate property which obliges the borrower Mortgage pipelineThe period from the taking of applications from prospective mortgage borrowers to the Mortgage rateThe interest rate on a mortgage loan. Mortgage-backed securitiesSecurities backed by a pool of mortgage loans. MortgageeThe lender of a loan secured by property. MortgagerThe borrower of a loan secured by property. Multicurrency clauseSuch a clause on a Euro loan permits the borrower to switch from one currency to Multiple-issuer poolsUnder the GNMA-II program, pools formed through the aggregation of individual Negative amortizationA loan repayment schedule in which the outstanding principal balance of the loan OriginationThe making of mortgage loans. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |