Glossary
Grace days
Terms used in connection with drafts to denote the days for which interest is paid in addition to maturity thus providing time for the funds to be transferred.
Grace period
The period during which no repayments of principal are due from borrowers to lenders.
Indication of interest
A legally non-binding document sent to indicate the terms of possible financing.
Instalment
The regular periodic payment that a borrower agrees to make to the lender.
Interbank rate
Cost for the use of capital by prime banks expressed as a percentage of the sum of money borrowed.
Interest rate
The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate.
L/C
Letter of credit. See also Documentary Credit.
Letter of credit
See Documentary Credit.
LIBOR
London Interbank Offered Rate, the London Interbank base-borrowing rate, the interest rate applied in large Interbank transactions. Represents the best current market rate for the currency in question.
Limited recourse financing
Financing with limited recourse to the project company or the exporter. i.e. the financier takes risks traditionally born by some other parties to bear.
Liquidated damages
Damages determined in contract that the party in breach of contract is liable to pay if a prescribed incidence occurs. Usually a percentage of the contract value.
Margin
Premium covering the credit risk of the Borrower. The total interest rate is the aggregate of the Lenders cost of funds and his margin for the risk taken.
Matching
Term used to denote the process in which the ECA matches its guarantee or insurance conditions with those of an ECA. Due to EU rules, in deals where two or more ECAs would be eligible, the conditions and terms have to be matching.
Maturity
The date on which an obligation becomes due and payable.
Maximum coverage
The highest percentage of the loan principal that can be guaranteed or insured.
Mean delivery
The date by which 50 % of the value of the goods to be delivered or the services to be render have been delivered or rendered. Significant in ECA covered transactions as the beginning of credit period and repayment is often determined in relation to the mean delivery.
Mixed credit
Credit with government support or subsidy in form of interest support or grants. To be eligible for a mixed loan facility the project must commercially unfeasible. Also known as soft loan
Multi sourcing
A term used to denote the provision of goods from a number of different countries.
