Banking & Finance Glossary—L

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Banking & Finance Glossary—L
  • Lag mechanism
  • LBO
  • Lexis®PSL resources
  • Lead manager
  • Letter of credit
  • Leverage
  • Leverage test/leverage ratio
  • Leveraged loan
  • Leveraged recapitalisation
  • More...

Banking & Finance Glossary—L

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 by starting the reference period for calculations five days before the beginning of the interest period and finishing five days before the end.


Leveraged buy-out; a buy-out of a business by a financial sponsor where the transaction is partially financed with debt

Lexis®PSL resources

What is acquisition finance?

Lead manager

A financial institution that arranges and manages a syndicate of banks and agrees to place an issue of securities

Letter of credit

An undertaking of a bank (issuing bank) at the request of the applicant to make payment to a third party (the beneficiary) for an agreed sum at an agreed time usually upon the production of stated documents


The proportion of debt finance to equity for any particular entity or transaction; in acquisition finance transactions leverage generally refers to the proportion of debt finance to EBITDA

Leverage test/leverage ratio

The leverage ratio is normally expressed as a ratio of Total [Net] Debt to EBITDA.

For more information, see Leveraged finance—financial covenants

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