Credit spread meaning

This checklist outlines the principal ISDA documentary points that should be considered during a financing transaction. Term sheet stage If acting for a borrower and specialist hedging advisers are engaged, obtain their input on the term sheet. If acting for a borrower, confirm the total pricing of the deal is clear (covering both the loan and the hedge). A borrower may pick a lender for a low loan margin, only to find that the swap credit spread from the same lender renders the overall economics less appealing than those from another lender. Are the loan and hedging set on an IBOR basis (eg EURIBOR) or on a risk free rate (eg SONIA or SOFR)? Does the lender require a zero floor in its loan? If acting for a borrower, ensure the borrower understands the consequences of any mismatch between this and the hedging documentation. ...

ARCHIVED : This Checklist has been archived and is not maintained . STOP PRESS: From 1 November 2024, the UK’s new securitisation framework took effect, annulling and supplanting the onshored EU legislative regime. Although the UK rules broadly preserve the substance of the prior onshored EU approach, they part company in several notable respects, including scope, risk retention, transparency, due diligence and STS designation. For a side-by-side of the STS criteria under both frameworks, see Practice Note: UK and EU securitisation regimes—comparison. On 17 June 2025, the European Commission issued its long-anticipated review of the EU Securitisation Framework, together with an extensive legislative package proposing amendments to the EU Securitisation Regulation (Regulation (EU) 2017/2402), the EU Capital Requirements Regulation (Regulation (EU) No 575/2013), the EU Solvency II Delegated Regulation (Commission Delegated Regulation (EU) 2015/35) and the EU Liquidity Coverage Requirement Delegated Regulation (Commission Delegated Regulation (EU) 2015/61). Proposed changes to the EU Securitisation Regulation cover, among other matters, risk retention, due diligence, transparency, STS on-balance sheet securitisations and...

Regulation (EU) 2017/2402 (the EU Securitisation Regulation) came into force on 18 January 2018 and has been applicable since 1 January 2019. The EU’s Official Journal carried, on 6 November 2019, Commission Delegated Regulation (EU) 2019/1851 (the EU Homogeneity RTS). This Checklist outlines the criteria for traditional and synthetic simple, transparent and standardised (STS) securitisations under the EU Securitisation Regulation and the EU Homogeneity RTS. STOP PRESS On 17 June 2025, the European Commission released its long-anticipated review of the EU Securitisation Framework, together with a wide-ranging legislative proposal to revise: the EU Securitisation Regulation (Regulation (EU) 2017/2402), the EU Capital Requirements Regulation (Regulation (EU) No 575/2013), the EU Solvency II Delegated Regulation (Commission Delegated Regulation (EU) 2015/35) and the EU Liquidity Coverage Requirement Delegated Regulation (Commission Delegated Regulation (EU) 2015/61). Changes to the EU Securitisation Regulation cover, among other areas, risk retention, due diligence, transparency, STS on-balance sheet securitisations, and the definitions of public and private securitisation. Amendments to the Capital Requirements Regulation concern, inter alia, risk-sensitive...

On 5 November 2024, RBC Capital Markets (RBC) warned that last month’s Court of Appeal decision in three consolidated test cases may extend into other credit segments, such as premium finance. In the wake of the ruling, high street banks could be liable for redress totalling potentially billions of pounds, after the court determined that all finance agreements involving commissions must be fully revealed to customers...

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In this issue: UK mergers UK antitrust UK private actions UK competition policy UK market studies EU state aid Russia’s war against Ukraine LexTalk®Competition: a Lexis®Nexis community Daily and weekly news alerts New and updated content Caselex UK mergers Spreadex/Sporting Index referred to phase 2 The CMA has referred to phase 2 the completed purchase by Spreadex Limited (Spreadex) of the business-to-consumer (B2C) operation of Sporting Index Limited (Sporting Index). Both businesses offer UK customers online fixed-odds betting and online sports spread betting, while Spreadex also provides financial spread betting and casino betting. On 11 April 2024, the CMA confirmed the deal met the threshold for an in-depth investigation. During phase 1, the authority concluded the merger gives rise to an SLC owing to horizontal unilateral effects in the UK supply of licensed online sports spread betting. Notably, the CMA considered that the transaction may have led to a monopoly by eliminating...

Background to the Single Supervisory Mechanism In the wake of the 2008 financial crisis, heightened concern spread across the EU about threats to the stability of the single currency and the integrated market for banking services. To tackle these issues, strengthen financial stability and aid economic recovery, the EU has been building a European Banking Union, anchored in a single regulatory rulebook for financial services, to advance the integration of banking supervision across the EU. At its core sits the Single Supervisory Mechanism (SSM), created by Council Regulation (EU) 1024/2013 and complemented by the SSM Framework Regulation, Regulation (EU) 468/2014. The SSM seeks to ensure that oversight of credit institutions is coherent and effective, and consistent with the functioning of the internal market for financial services and the free movement of capital. Application and scope The SSM Regulation covers credit institutions established in a eurozone Member State. In addition, a Member State not in the eurozone may request to be brought under SSM supervision by establishing close...

This Practice Note explores key elements of the regulatory landscape for 'buy now, pay later' (BNPL), covering definitions and the relevant regime and scope as currently understood today. It also monitors policy change in this space, including the rollout of a tailored framework for deferred payment credit (DPC) from July 2026. Key points on BNPL and DPC are as follows: BNPL arrangements let a shopper acquire goods immediately and postpone settlement of the full amount to a subsequent date. Terms differ by provider, and the period over which costs are spread can span 30 days to as long as three months The BNPL sector has expanded markedly in recent years, from £0.06bn in 2017 to more than £13bn in 2024. As reported in the FCA’s 2024 Financial Lives Survey, 20% of UK consumers (10.9 million adults) used it in the 12 months to May 2024 The label BNPL is wide-ranging and may cover credit agreements that already fall within regulation as well as unregulated...

What is a rescue buyout? A company or business in a rescue scenario is typically facing potential financial strain, for example when it: has a short-term inability to meet its debts, or lacks capital or alternative finance to support medium to long-term development In private equity terms, following the 2007–2008 credit crunch, many funds actively sought to acquire troubled companies, with the intention of engineering turnarounds and folding them into their portfolios. This sort of distressed investment is counter-cyclical and can be a practical way to spread risk and balance exposure within a portfolio. By contrast, incumbent private equity investors backing distressed businesses could themselves become targets if a portfolio company moved into the ‘zone of insolvency’. The following types of company are commonly viewed as suitable for turnaround by private equity firms, in particular those that: need operational and financial reshaping face structural issues possess a sound core business (i.e. a strong product/service with clear...