Discount Rate

From Open Risk Manual

Definition

The Discount Rate (also Haircut) in a securitisation context denotes the rate by which notional amounts of the Transferred Receivable might be discounted for the purposes of calculating relevant balances.

In the context of Supply Chain Finance (Also Discount Charge) it is when a buyer purchases a Bill of Exchange or an accounts receivable from a vendor, the rate at which it is paid (discounted relative to its face value) prior to its Maturity Date.

Details

Discounting provides an additional Credit Enhancement mechanism

Variations

None

Issues and Challenges

None

See Also

None

Disclaimer

  • This information is provided as is without any representation of correctness, completeness or suitability for any purpose whatsoever. Refer to actual securitisation prospectuses for the definitive terms applicable in each case
  • Definitions, detailed descriptions and other content may change at any time as further examples or relevant aspects are introduced

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