Credit Sleeve


DEFINITION of 'Credit Sleeve'

A form of credit agreement, backed by physical assets, where the lending party will provide working capital and collateral to another company, known as the "sleeve provider". The lending party will essentially co-guarantee certain outstanding credit arrangements the sleeve provider has with other lenders and increase the overall credit quality of the sleeve provider.

BREAKING DOWN 'Credit Sleeve'

This type of working capital loan is most often found within the energy industry, where sleeves are backed by physical energy assets and carry certain cash flow requirements for the sleeve provider to continue to operate. Credit sleeves are often set up when a company has seen its credit quality decline and access to traditional forms of debt financing has run dry.

  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  2. Working Capital

    Working capital is a measure of both a company's efficiency and ...
  3. Debt Financing

    When a firm raises money for working capital or capital expenditures ...
  4. Credit

    1. A contractual agreement in which a borrower receives something ...
  5. Facility

    A formal financial assistance program offered by a lending institution ...
  6. Line Of Credit - LOC

    An arrangement between a financial institution, usually a bank, ...
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