The purchase of the financial guarantee of a large insurance company to raise funds. In the context of project financing, the issuance of a guarantee or additional collateral to reinforce the credit strength of a project financing. Also, the reduction of counterparty risk on a swap transaction through such measures as bilateral netting.
Nearby TermsCredit default swap Credit derivative Credit enhancement Credit history Credit insurance
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University