BROWSE

Backup Line

What is 'Backup Line'

A line of credit used by a bank to cover any issue of commercial paper for which financing from new paper may not be available. A backup line of credit effectively provides an alternate source of liquidity for the issuer and a source of credit for the purchaser. Backup lines usually take the form of a confirmed letter of credit or contractual facility.

Explaining 'Backup Line'

The amount of backup line generally ranges from 50 to 100%, depending upon the quality of the paper issued. Lower grade paper usually get greater coverage and vice-versa. These lines of credit are usually paid for with either compensating balances or else with a simple straight fee.


Further Reading


Are banks still important for financing large businesses?
papers.ssrn.com [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …

Bank lines of credit in corporate finance: An empirical analysisBank lines of credit in corporate finance: An empirical analysis
academic.oup.com [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …

Bank lending during the financial crisis of 2008Bank lending during the financial crisis of 2008
www.sciencedirect.com [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …

The impact of financial intermediation on economic growth: The Nigerian perspectiveThe impact of financial intermediation on economic growth: The Nigerian perspective
papers.ssrn.com [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …

Getting up to speed on the financial crisis: a one-weekend-reader's guideGetting up to speed on the financial crisis: a one-weekend-reader's guide
www.aeaweb.org [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …

A Backup Quarterback View of Mezzanine FinanceA Backup Quarterback View of Mezzanine Finance
onlinelibrary.wiley.com [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …

Structured investment vehicles: the unintended consequence of financial innovation: some reasonable ideas and objectives combined to have unexpected effectsStructured investment vehicles: the unintended consequence of financial innovation: some reasonable ideas and objectives combined to have unexpected effects
go.gale.com [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …

Liquidity risk and syndicate structureLiquidity risk and syndicate structure
www.sciencedirect.com [PDF]
… the firm's borrowing rate cannot exceed the rate guaranteed by the backup line of credit, the backup line of credit … In response to the default, commercial paper issuers began establishing backup lines of credit with banks to … 2 CURRENT ISSUES IN ECONOMICS AND FINANCE …


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