What is the definition of Credit Enhancement?

Credit Enhancement refers to techniques or methods used in order for a company to have an improved credit rating or credit worthiness. An example of this would be through giving an insurance via standby letters of credit (provided by a bank) or by a financial guarantee.

Another example of performing a credit enhancement would be to add conversion rights to a debt instrument in an effort to decrease the interest rates.

Issuers also try to raise the credit rating of a municipal bond or an asset-backed security and improve their marketability. They do this by getting an investment rating from a bond rating agency.

• Reinstatement
• Registered Principal
• Liquor Liability
• Businessowners Policy (BOP)
• Directors and Officers Liability Insurance