Call Risk: Risk to the investor associated with prepayments by the issuer of the principal amount of the bonds prior to the stated maturity date, in accordance with the bonds' redemption provisions.
Capital Appreciation Bonds: Long-term bonds which pay no current interest, but accrete or compound in value from the date of issuance to the date of maturity. CABs differ from zero coupon bonds in that they are issued at an initial amount and compound in value, in contrast to zeroes, which are issued at a deep-discount and compound to par.
Capital Reserves: Funds that remain in a bank and are not loaned out. These funds can be used to support a variety of credit enhancement tools. Capital reserves also can be used to leverage the lending institution, or borrow against reserves to expand the pool of available loan funds.
Capitalization: Process of depositing various funds as seed capital into a lending institution to enable financial services. This pool of money is distributed, through loans and credit enhancements, in such a way to ensure that payments are made back to preserve the corpus.
Capitalized Interest: A specified portion of the original bond proceeds which will be used to pay interest on the bonds until revenue from planned sources becomes available upon completion of construction.
Charge Off: Alternative term to write-off. Write-off is the preferred term. (See "Write-off".)
Claim: Synonymous with the term "debt," for purposes of this document. (See "Debt.") Alternative meanings of the word "claim" include a request (1) submitted by a lender for government payment of a defaulted guaranteed loan; (2) filed with the Department of Justice for the pursuit of litigation and/or enforced collection of an account; or (3) filed with an agency for the payment of an amount considered due to the submitting individual or organization, such as for medical insurance.
Close Out: Occurs concurrently with or subsequent to an agency decision to write off a debt for which the agency has determined that future additional collection attempts would be futile.
Cohort: Direct loans obligated or loan guarantees committed by a program in the same year even if disbursements occur in subsequent years. Post-1992 direct loans or loan guarantees will remain with their original cohort throughout the life of the loan, even if the loan is modified. Pre-1992 loans and loan guarantees that are modified shall each, respectively, constitute a single cohort. (OMB Circular No. A-11, "Preparation and Submission of Budget Estimates." Executive Office of the President, Office of Management and Budget, hereafter cited as OMB Circular No. A-11.)
Collateral: Any property pledged as security for a loan.
Collection Agency: Private sector entity whose primary business is the collection of delinquent debts.
Collection: Process of receiving amounts owed to the federal government, such as payment on a debt.
Commercial: Adjective used to signify a business activity, regardless of whether that activity has been undertaken by an individual or business.
Compromise: Accepting less than the full amount of the debt owed from the debtor in satisfaction of the debt. Also referred to as "settlement."
Consumer: Adjective used to signify a personal activity. For example, a loan to a farmer to buy an automobile for personal use would be considered a consumer loan.
Contingencies: Existing conditions, situations, or circumstances which involve uncertainty and which could result in gains or losses. For example, guaranteed loans represent contingent liabilities which, in the event of default by the borrowers, the federal government would be liable to cover the losses of the guarantors, and thereby sustain the loss itself.
Contract Authority: A form of budget authority that permits obligations to be made in advance of appropriations or receipts. Contract authority therefore is unfunded and requires a subsequent appropriation or offsetting collection to liquidate (pay) the obligations. The federal-aid highway program has operated under contract authority since 1921.
Cooperative Agreement: Written consent between two parties to define the basic structure and purpose of a financial transaction, including the roles the parties involved and the way in which funds will be administered.
Corpus: The corpus refers to all initial funds, additional, and subsequent revenue deposited for bank capitalization. The corpus is essentially a "body" of funds that is available, on a revolving basis, for use in providing financial assistance to borrowers.
Coverage Margin: The margin of safety for payment of debt service on a revenue bond, reflecting the number of times (e.g., 1.2) by which annual revenues after operations and maintenance costs exceed annual debt service.
Credit Cycle: Complete credit process, composed of four phases: credit extension, account servicing, debt collection, and write-off/close out.
Credit Enhancement: Financial guarantees or other types of assistance that improve the credit of underlying debt obligations. Credit enhancement has the effect of lowering interest costs and improving the marketability of bond issues.
Credit Enhancement: Financing tools - such as letters of credit, lines of credit, bond insurance, debt service reserves, and debt service guarantees -that improve the credit quality of underlying financial commitments. Credit enhancements have the effect of lowering interest costs and improving the marketability or liquidity of bond issues.
Credit Extension: Review and approval of requests for short- and long-term credit.
Credit Program: Federal program that makes loans and/or loan guarantees to non-federal borrowers.
Credit Reporting Bureau: Private sector entity which collects financial information on debtors and whose reports on debtors reflect information received from the public and private sectors.
Credit Score: A statistically-based measure of risk of a particular type of loan to a particular borrower.
Credit: Promise of future payment in kind or of money given in exchange of present money, goods, or services.
Current Discount Rate: Discount rate used to measure the cost of a modification with respect to the modification of direct loans or loan guarantees. It is the interest rate applicable at the time of modification on marketable Treasury securities with a similar maturity to the remaining maturity of the direct guaranteed loans, under either pre-modification terms, or post-modification terms, whichever is appropriate.
Current Receivable: a receivable on which payment is due within 12 months of the reporting period. |
