Credit Sleeve

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Working Capital

    This ratio indicates whether a company has enough short term ...
  2. Credit Facility

    A type of loan made in a business or corporate finance context. ...
  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. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  6. Facility

    A formal financial assistance program offered by a lending institution ...
RELATED FAQS
  1. What are the sources of funding available for companies?

    Despite all the differences among companies, there are only a few sources of funds available to all firms. 1. They make ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies or the boot for investors. Find out how to tell the difference.
  2. Investing Basics

    What Is A Corporate Credit Rating?

    Is the bond you're buying investment grade, or just junk? Find out how to check the score.
  3. Mutual Funds & ETFs

    Want to Go Long Natural Gas? Eye the UGAZ ETN

    Is UGAZ the best way to play natural gas? Maybe not.
  4. Chart Advisor

    These Oil Service Stocks Are Ready For A Move Higher

    In the oil services sector, active traders have been trying hard to establish a floor and the double bottom pattern that is appearing on the chart suggests that a short-term reversal could be ...
  5. Economics

    Oil Investments Boost Egypt's Recovery Prospects

    Major foreign oil companies have provided a big boost to the Egyptian economy by agreeing to invest around US$17 billion in the country's energy sector.
  6. Stock Analysis

    The Newest Danger For Cliffs Natural Resources

    Commodities prices have sent Cliffs Natural Resources, iron-ore producer, to crash downward last year to levels not seen in more than a decade.
  7. Investing

    How Low Oil Prices Affect Alternative Fuels

    Cheaper oil may make renewable energy sources such as solar and wind power less attractive.
  8. Stock Analysis

    What Makes LinnCo Different From MLPs?

    MLPs are some of the favorite investments of dividend investors, as the surge in the energy industry increased the amount of income that MLPs paid out to.
  9. Stock Analysis

    Can Eagle Rock Energy Partners Soar In 2015?

    Eagle Rock Energy has seen its prices drop, but there is a ray of hope that could send units higher in 2015 even if the price of oil doesn’t rally.
  10. Charts & Patterns

    Are These the 10 Best Energy Stocks of 2015?

    These energy stocks are a bit more speculative than you might expect, but their long-term upside potentials are high.

You May Also Like

Hot Definitions
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  2. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  3. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  4. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  6. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
Trading Center