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Corporate Lending (chapter 8) - Coggle Diagram
Corporate Lending (chapter 8)
The Purpose of Corporate Lending
The loan portfolio
Diversification in: interest rates, cashflows, and maturities
Key considerations
Portfolio creation indicates the key success factor
The Principles of Corporate Lending
The lending cycle
Structuring the loan proposal
Methods to assess corporate lending
The 5C's
The PARSER
Three traditional ways to get out of a loan
3 overarching principles
Profitability
Suitability
Safety
The “hurt money” rule
Product structure and application
Seven specific features of project finance
Commonly used recourse in project financing
Nonrecourse financing
Limited recourse financing
Credit Rating Agencies
Credit information allows for some transparency in the loan pricing process
Credit rating agencies have an impact on the reputation of firms under assessment
Rating provides a basis for comparing the credit risk of one organization with that of others
It is important to know which agency undertook a particular assessment and what key or legend that agency uses
Managing the Loan Portfolio
Internal factors
Warning signals
External factors
Five C’s of bad credit
Advice from the past