Backup Line

Dictionary Says

Definition of '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.
Investopedia Says

Investopedia explains '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.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Bank

    A financial ...
  2. Line Of Credit - LOC

    An arrangement ...
  3. Commercial Paper Funding Program - CPFP

    A program ...
  4. Commercial Paper

    An unsecured, ...
  5. Commercial Paper Funding Facility - CPFF

    An institution ...
  6. Marketable Securities

    Very liquid ...
  7. Money Market

    A segment of the ...
  8. Money Market Fund

    An investment ...
  9. Two Name Paper

    A nickname ...
  10. Super NOW Account

    An account ...

Articles Of Interest

  1. Asset-Backed Commercial Paper Carries High Risk

    Asset-backed commercial paper has characteristics that make it much more risky than traditional commercial paper.
  2. 5 Signs Of A Credit Crisis

    These indicators can illuminate the depth and severity of problems in the credit markets.
  3. The Money Market

    If your investments in the stock market are keeping you from sleeping at night, it's time to learn about the safer alternatives in the money market.
  4. Money Market: Commercial Paper

    If your investments in the stock market are keeping you from sleeping at night, it's time to learn about the safer alternatives in the money market.
  5. Money Market: Conclusion

    If your investments in the stock market are keeping you from sleeping at night, it's time to learn about the safer alternatives in the money market.
  6. How Interest Rates Affect The Stock Market

    Whether you're buying lunch, a home or a stock, you're influenced by interest rates.
  7. Stashing Your Cash: Mattress Or Market?

    Pulling your money out of the market may help you sleep at night, but is it a smart move?
  8. Defining The 3 Types Of Investments

    The first step to being a successful investor is knowing what is and isn't an investment.
  9. Spotting A Forex Scam

    Forex scams are more common than you think. We tell you how to spot them.
  10. Why Money Market Funds Break The Buck

    These funds are noted for their safety in a rough market. Read on to find out why.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center