Banking & Finance glossary

Banking & Finance glossary guidance:

ACT Association of Corporate Treasurers. ACT website Administration Administration is a procedure under the Insolvency Act 1986 under which a company in financial...

Practice Note

Back office Administrative departments in a bank which are involved in activities such as settlement and accounts Back to back transaction A transaction that has a mirror...

Practice Note

Capitalisation of interest Where interest is added to the principal amount of a loan to be paid at the same time as the principal. This contrasts with cash interest which...

Practice Note

Debt pushdown Where debt held by a holding company is repaid by the holding company and re-borrowed by a subsidiary (normally this is notional and done through accounting...

Practice Note

EBITDA Earnings before interest, tax, depreciation and amortisation. The EBITDA of the business forms part of certain financial covenant ratios and is used to calculate...

Practice Note

Face value The nominal value of a security rather than its market value Facility agent The financial institution that acts as administrative agent for the syndicate in a...

Practice Note

Gearing A term which indicates the debt to equity ratio of a company Gilts Securities issued by the British government Grace period The period of time given to a borrower...

Practice Note

Haircut A term referring to the reduction in value of an asset or the cash flow received from it. This is usually expressed in percentage terms. Hedge counterparty A...

Practice Note

IBA This refers to ICE Benchmarks Administration Ltd, the administrator of LIBOR IBOR ‘IBORs’ are benchmarks based on Interbank Offered Rates (ie the rate at which one...

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Junior debt Debt that is subordinated to or otherwise ranks behind senior debt Lexis®PSL resources Intercreditor agreement—parties and structures

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Key person One or more persons designated by lenders/investors as key to a business. Contractual provisions within the documentation may specify the required degree of...

Practice Note

Lag mechanism This is a mechanism for calculating compounded SONIA for use in bond or loan markets. It is intended to provide a little visibility to borrowers or issuers...

Practice Note

Maintenance covenant Type of covenant which is tested on a regular basis; contrasts with an incurrence covenant where compliance is only tested when the borrower wishes...

Practice Note

Naked credit default swap A credit default swap which is purely speculative and on which neither party owns the reference entity Net asset value The...

Practice Note

OECD The Organisation for Economic Cooperation and Development, an association of industrialised economies which provides inter alia economic research and policy...

Practice Note

Par The face value of a security at which it will be redeemed by the borrower at maturity Pari passu Literally means on an equal basis. The pari passu principle dictates...

Practice Note