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credit enhancement

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Financial Dictionary

Credit Enhancement

A method whereby a company attempts to improve its debt or credit worthiness.

Investopedia Commentary

Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing interest rate.

See also: Convertible Bond, Credit, Impaired Credit

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Financial Dictionary

credit enhancement

An addition to a bond issue that improves the issue's safety of principal and interest. For example, the purchase of insurance guaranteeing payments on a bond issue is credit enhancement.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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