Distressed Debt
What is Distressed Debt? Distressed debt refers to the securities of a government or company that has either defaulted, is under bankruptcy protection, or is in financial distress and moving toward the aforementioned situations in the near future. It includes all credit instruments that are trading at a significant discount and have a spread substantially...
Revolving Debt
Overview of Revolving Debt A revolving debt (a “revolver,” also sometimes known as a line of credit, or LOC) does not feature fixed monthly payments. It differs from a fixed payment or term loan that has a guaranteed balance and payment structure. Instead, the payments of revolving debt are based on the balance of credit...
Direct Security
What is Direct Security? Direct security is typically collateral that can be used to secure a loan. Securities can be broadly divided into two distinct types: asset securities and collateral securities. Asset security represents ownership interest held by shareholders in an enterprise, realized in the form of shares of capital stock. Holders of equity securities...
General Security Agreement (GSA)
What is a General Security Agreement (GSA)? A General Security Agreement (GSA) grants a security interest over personal property or assets, the collateral pledged for many types of financing. The contract is executed by a debtor (borrower) in favor of a creditor (lender). A GSA can support various lender obligations, including personal and commercial loans....
Quality of Equipment
What is the Quality of Equipment? Evaluating the quality of equipment as collateral for a loan plays an important role in the credit analysis process, as it determines the potential amount of money to be paid for an asset pledged as collateral. In the event a borrower goes bankrupt, a lender can repossess the collateral...
