Business Glossary

short-term or medium-term euronote financing denominated in several currencies. The facility allows the borrower to choose the currencies to draw in successive rollover periods, when the loan is refinanced. It is the riskiest credit facility for the borrower, because the lender has the right to set the currency in which the loan will be paid off. The loan will reprice periodically, say every six months, in different currencies, depending on the lender's perception of currency risk in the transaction.

revolving credit arrangement in the Euromarket, whereby the borrower issues short-term promissory notes (Euronotes) in its own name, generally with maturities of three to six months. A group of underwriting banks guarantees the availability of funds by agreeing to purchase any unsold notes at each rollover date, or by writing a standby line of credit. NIFs offer companies the flexibility of short-term financing, and give lenders an opportunity to meet credit needs of borrowers without being required to purchase any unsold notes. The revolving line of credit is often negotiated through a single bank that in turn sells participations to other members of the underwriting syndicate.

credit facility that arranges project financing through secondary obligations, rather than primary ones. A standby facility guarantees payment if the original note issuer defaults. It is often used by weak credit borrowers, who pay a commission to the guarantor, who is secondarily liable if the primary issuer defaults. This as an off-balance sheet item in financial reporting.

Euronote facility allowing the original underwriter, the project manager, to reserve the right to transfer the commitment to an other agent willing to assume financial responsibility. This transfer of authority has to be done with the consent of all the original parties to the facility, and is both a transfer of responsibility and management.

form of Revolving Underwriting Facility in which the lender's yield is pegged to the bank prime rate. Typically, a prime underwriting facility is a short-term note having a maturity of one to three years. If the lead bank cannot fully place the loan, it will call on the facility's underwriters to fund the credit.

medium term Euronote financing allowing the borrower to choose from several funding options, i.e., a medium-term project financing allowing the option of using different guidelines for pricing, such as prime rate, banker's acceptance rate, and Eurodollar rate. Such options, however, must be listed clearly in the original loan agreement.