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 Pari passu

Means “at an equal rate”, and can refer to financial instruments that rank equally in right of payment with each other and with other instruments of the same issuer. It is also often used in bankruptcy proceedings where creditors are said to be paid “pari passu”, meaning each creditor is paid pro rata in accordance with the amount of his claim

 Paris Club

A forum that establishes agreements relating to the rescheduling of debt for countries experiencing payment difficulties.  At Paris Club meetings, the debtor country and the creditor countries involved negotiate a framework agreement that outlines a rescheduled timetable of debt repayments.

 Performance bond

A facility normally issued by a surety company or commercial bank to a buyer to guarantee that the exporter will fully implement the terms of its contract. Performance bonds are normally conditional; that is, they can usually only be called if the buyer can demonstrate (in accordance with the terms of the facility) breach of contract by the exporter.

 Political risk

One of the two main categories of risk covered by credit insurers (the other is commercial risk). Political risks are linked to non-payment of an export transaction due to financial and political conditions in the buyer’s country.  These may include acts of war or civil disturbances, imposition of laws that prevent the transfer of payments, cancellation of your buyer’s import permits, or default of a sovereign buyer.

 Pre-shipment period

The pre-delivery period between receipt of the order until the shipment (or of acceptance by the buyer) of the capital goods.

 Premium

The sum charged by the NZECO for the issue of a guarantee.

 Principal

A person who has authorised another (agent) to act on his or her behalf.

 Project financing

A loan structure where a bank grants finance to a joint venture company that has been formed to implement a specific project.  In return, the bank gains primary access to the future cash flow, assets and contracts of the joint venture company.  The forecasted earnings of the project thus provide the essential security for the lender.

 Promissory note

A written document, drawn up by the importer in favour of the exporter, which contains an unconditional promise to pay a definite sum of money on demand or on a specified future date.  The only difference between a promissory note and a bill of exchange is that the maker of the note pays the exporter personally, rather than ordering a third party to do so.  When endorsed by the exporter, and if the buyer is creditworthy, a promissory note can be used in forfaiting.

 Public Information (PI) Rating

A credit rating with a ‘pi’ subscript signifies that the rating was based on an analysis of published financial information, as well as additional information in the public domain. They do not reflect in-depth meetings with the company’s management and are therefore based on less-comprehensive information than ratings without a 'pi' subscript.