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Pari-passu

Definition

Pari passu is a Latin phrase that literally means "with an equal step" or "on equal footing". It is sometimes translated as "ranking equally", "hand-in-hand", "with equal force", or "moving together", and by extension, "fairly", "without partiality".

Pari-passu

What is 'Pari-passu'

Pari-passu is a Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations are equally managed without any display of preference. An example of pari-passu occurs during bankruptcy proceedings when a verdict is reached: all creditors can be regarded equally and will be repaid at the same time and at the same fractional amount as all other creditors.

Explaining 'Pari-passu'

In finance, the term pari-passu refers to loans, bonds or classes of shares that have equal rights of payment or equal seniority. In addition, secondary issues of shares that have equal rights with existing shares rank pari-passu. Wills and trusts can assign an in pari-passu distribution where all of the assets will be equally divided between the named parties.

Pari-passu in Finance

Pari-passu may be used to describe certain clauses within a variety of financial vehicles, such as loans and bonds. Often, these clauses are in place to ensure the associated financial product is functioning as an equal to all others of a similar nature. As it relates to debt, these are most often in place when dealing with unsecured obligations.

Secured and Unsecured Debts

Since secured debts are backed by a particular asset, they are often not fully equal to the other obligations held by the borrower. Since unsecured debts are not supported by a specific asset, the need to be considered equal to other obligations may be greater in instances of borrower default or bankruptcy. Further, a provider of unsecured financing may enact clauses that prevent a borrower from taking part in certain activities, such as the promising of assets for another debt, in order to keep a position with regard to repayment.


Further Reading

Finance, funding, saving, and investmentFinance, funding, saving, and investment
www.tandfonline.com [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

Rogue trends in sovereign debt: Argentina, vulture funds, and pari passu under New York lawRogue trends in sovereign debt: Argentina, vulture funds, and pari passu under New York law
heinonline.org [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

Pari Passu and a Distressed Sovereign's Rational ChoicesPari Passu and a Distressed Sovereign's Rational Choices
heinonline.org [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

The pari passu interpretation in the Elliott case: a brilliant strategy but an awful (mid-long term) outcomeThe pari passu interpretation in the Elliott case: a brilliant strategy but an awful (mid-long term) outcome
heinonline.org [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

Sovereign bond contract reform: Implementing the new ICMA pari passu and collective action clausesSovereign bond contract reform: Implementing the new ICMA pari passu and collective action clauses
www.cigionline.org [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

Argentina's post-2001 economy and the 2014 defaultArgentina's post-2001 economy and the 2014 default
www.sciencedirect.com [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

Understanding the pari passu clause in sovereign debt instruments: a complex questUnderstanding the pari passu clause in sovereign debt instruments: a complex quest
www.jstor.org [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

The pari passu clause in sovereign debt instrumentsThe pari passu clause in sovereign debt instruments
heinonline.org [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

Courts and sovereigns in the              Courts and sovereigns in the
academic.oup.com [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …

Restructuring a sovereign bond pari passu work-around: can holdout creditors ever have equal treatmentRestructuring a sovereign bond pari passu work-around: can holdout creditors ever have equal treatment
heinonline.org [PDF]
… of the increased income flow, a greater real savings flow must be pari passu occurring … A. "Finance, Liquidity, Saving, and Investment." Journal of Post Keynesian Economics, Fall 1986 … and the Liquidity Preference Theory of the In- terest Rate." Review of Economic Studies, 1957 …


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