When lots of similar receivables are bundled together in an asset-backed security, the average rates of default, late payment and pre-payment are predictable, so both issuers and investors can be relatively confident of their ability to value the security properly.
Both could very likely get lower interest rates from private lenders if those lenders got the promise of a part-gold payment in the event of default.
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Of course, this type of policymaking underscores the importance of making the default choice a good one (an adjustable-rate mortgage with no down payment would be an example of a bad default).
The deal, in theory, avoids the possibility of a imminent default on US payment obligations and lets Republicans off the hook.
Two problems here: The buyer might default, and a portion of each deferred payment is treated as highly taxed interest income.
Aron said no, declared Semgroup in default on its contracts and demanded immediate payment of losses.
It reduces the chances of a sovereign default triggered by inability to meet payment demands through private sector.
Layering of risk means the borrowers courted by these lenders had multiple characteristics that would put them at high risk for default, including no down payment, no documentation of income or assets, low credit scores and second mortgage in lieu of a down payment.
With this move, PayPal aims to become the default payment processor for small businesses and merchants by offering a complete array of services, enabling them to accept any type of payment.
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Harrisburg, the state capital of Pennsylvania, was scheduled to default on a 3.3 million dollar bond payment yesterday.
The card agreement says Chase is free to implement a default rate of 29.99% if a customer is late by just one day on a payment.
In the case of insured bonds, where the interest payment is funded by a bond insurer or letter of credit issuer, the default is still the same.
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But there seem to be no clauses in the prospectuses for Greek government bonds that would trigger accelerated payment of the rest of what's owed on any particular bond in default or that would put other bonds into default: in the jargon, there are no accelerated payment or cross-default clauses.
In the eyes of the central bank, any meddling with maturity or anything less than the receipt of full-payment at maturity would potentially constitute a credit event putting the nation at default.
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If the Big Three defaulted on their debts, holders of credit default swaps--which in recent years have grown like toxic weeds--would demand payment from those who wrote the insurance on the automakers' bonds.
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