BCM Vocabulary

  1. Basis point
    A hundreth of a percent.

    E.g. 0.25% = 25 basis points
  2. Bearer bond
    Debt security, title to which depends on possession and not an entry in a register maintained by the issuer
  3. Clean down
    A provision in an overdraft required the borrower to reduce or clear the overdraft and/or revolving credit facility for a number of consecutive days a month, so that the facility is used only to manage cashflow and not as a permanent source of finance.
  4. Commercial paper
    A short term debt security of less than a year (usually 90 days duration)
  5. Convertible
    A debt securitythat gives the holder the right to exchange it for shares in the issuer
  6. Coupon
    The colloquial term for the rate of interest payable on a debt security
  7. Drawdown
    The point at which the borrower accesses some or all of the money it is borrowing
  8. Fixed income
    Generic term for the debt securities market, because the majority of instruments pay a fixed rate of interest over their life
  9. Indemnity
    An agreement that creates a stand-alone primary obligation - unlike a guarantee.
  10. Keep-well agreement
    A form of comfort letter
  11. LIBOR
    London inter-bank offered rate.

    This is that rate at which banks lend to one another
  12. Matched funding
    The way in which a bank fund the loans it makes by borrowing on the inter-bank market
  13. Negative pledge
    A term that prohibits a borrower from granting security to third parties.
  14. Note
    Synonymous with 'bond'. i.e. a debt security
  15. Sovereign
    Market terms for a country which borrows in the intenrational capital markets (e.g. UK or Sweden)
  16. Swing line
    A facility that enables an issuer to repay commercial paper it is unable to rollover
  17. Tranche
    Slice - usually applies to borrowings where the borrowing or repayment is in instalments
  18. Day count fraction
    Basis on which annual interest will be apportioned.

    • In UK - 365
    • IN US - 360

    Divide by day count fraction and multiple by number of days borrowed.
  19. Time of day for fixing
    Usually 11am in London
  20. Working capital facility

    • - Repayable on demand
    • - Often contains a clean down provision
  21. Term loan
    Loan of specific sum provided for a specific period of time.

    • - Usually for a specific purpose
    • - Committed
  22. Bilateral term loan
    Term loan provided by one bank to the borrower

    - Limited amount that can be lent
  23. Syndicated loan
    Loan by more than one bank to the borrower.
  24. Secondary syndication
    When participants in a syndicated loan sell their committment in the loan
  25. Revolving credit facility
    Funds can be drawn when needed (like an overdraft) but funds at committed(like a loan)
  26. Swing-line facility
    Very short term (7-10 days) credit facility
  27. Facility
  28. Name of parties in a loan
    Borrower and lender
  29. Name of parties in a bond issue
    Issuer (borrower) and investor (lender)
  30. Working capital facility
    Working capital facilities - which fund companies' cashflow gaps - are either overdrafts or revolving credit facilities.
  31. Debt security
    All kinds of bonds such as bonds, loan stock, certificates of deposit, commercial paper.

    NOT shares or loans
Card Set
BCM Vocabulary
BCM Vocabulary