glossary on trade financing terms j l m n

Français:Limite de créditEspañol:Límite de crédito Letter of credit L/C: A financial document issued by an issuing bank at the request of a buyer applicant to a seller beneficiary, which

Español:Curva en J, curva en forma de J

Joint and several guarantee:

A guarantee by which the guarantor or guarantors commit themselves jointly and severally with the principal debtor The guarantor or guarantors may each be sued independently of the principal debtor

Français:Garantie conjointe et solidaire

Español:Garantía mancomunada y solidaria

Joint guarantor:

A guarantor who jointly and severally pledges to become legally liable for the debt or default of another person Legal entities can also act as a joint guarantor Also known as joint surety.Français:Garant solidaire

Español:Garante solidario, avalista solidario

Joint Venture:

A business undertaking between two or more companies or organizations which will share ownership and control of the joint company’s activities

Français:Entreprise en participation

Español:Empresa conjunta, empresa mixta, operación conjunta, proyecto mixto, proyecto en común, proyecto de riesgos compartidos

Junior creditors:

Second-line creditors in case of a debtor’s default, vis-à-vis senior creditors who have priority in the distribution of assets

Français:Créanciers de rang inférieur

Español:Acreedor no prioritario

Junk bonds:

High-risk bonds issued by companies with credit ratings below investment grade (a ranking given by the credit rating agencies) Such bonds are also called high-yield bonds as they offer investors higher yields than bonds of financially sound companies They are usually issued to finance leverage buy-out operations

Français:Obligations à haut risque

Español:Bono basura

Just-in-time (JIT):

A manufacturing system which minimises inventories by arranging that components and parts

be delivered as they are needed in the production process

Français:Juste à temps

Español:Justo a tiempo (JAT)

L

Lag strategy:

A foreign exchange management strategy consisting of delaying payments or receipts in a foreign currency, on the expectation of the evolution of the foreign exchange rate

Opposite: Lead strategy

Français:Stratégie de retardement

Español:Estrategia de atraso

Latin American Integration Association (LAIA):

A regional economic and trade integration agreement involving most Latin American nations

Français:Association d’intégration des pays d’Amérique Latine

Español:Asociación Latinoamericana de Integración (ALADI)

Last in, first out (LIFO):

LIFO is a method of evaluating and calculating a company's inventories (stocks, in the UK) See also First in, first out (FIFO)

Français:Dernier entré-premier sorti

Español:(método de) Ultima entrada, primera salida (UEPS)

L/C:

Abbreviation for Letter of credit

Français:Stratégie d'anticipation

Español:Estrategia de adelanto

Leasing:

A contract whereby an asset is supplied by its owner (the lessor) to another party (the lessee) for a specific period (usually long term), in return for periodic compensation (lease payments) The lessor retains title to the asset, while the lessee acquires the right to use it during the specified time without acquiring ownership rights Leasing is an indirect form of financing, as it permits the use of an asset whose purchase would otherwise have had to be financed by a loan

It also entails fiscal advantages compared with long-term loans Leasing contracts are usually signed for the use of industrial equipment, facilities and capital goods (such as machines, technical installations, vehicles, etc.) International leasing is a form of financing increasingly used in the export of equipment

Français:Crédit-bail

Español:Arrendamiento financiero

Legal lien:

See Lien

Français:Droit de rétention

Español:Legal lien

Lending limit:

The maximum value of a particular asset which may be used as collateral for a loan or mortgage(sometimes expressed as a percentage of the asset’s total value)

Français:Limite de crédit

Español:Límite de crédito

Letter of credit (L/C):

A financial document issued by an issuing bank at the request of a buyer (applicant) to a seller (beneficiary), which guarantees payment to the seller if the terms and conditions specified in the L/C are fulfilled It usually contains a brief description of the goods, the documents required, shipping date and an expiry date after which payment will no longer be made There are different types of L/C, according to the level of security they grant the beneficiary

(seller/exporter)

(1) Irrevocable Letter of Credit: This can neither be modified nor cancelled without the

agreement of all the parties concerned The payment by the issuing bank is guaranteed

provided that the beneficiary (seller/exporter) satisfies all the terms and conditions of the L/C

(2) Revocable Letter of Credit: This may be modified or cancelled by the issuing bank at any time and without notice to the beneficiary However, payments or drafts negotiated within the terms of the credit before receipt of the revocation or amendment notice from the issuing bank remain validly binding for all parties Negotiability is restricted to the advising bank and

confirmation is usually not available The revocable letter of credit gives maximum flexibility to the buyer but involves risks for the seller

(3) Confirmed Irrevocable Letter of Credit: A L/C in which the responsibility of another bank (the confirming bank, which is usually the same as the advising bank) has been added to that of the issuing bank, upon authorization or request of the latter The confirmation represents a definite undertaking by the confirming bank, which obligates itself in the same manner as the issuing bank It is used to back up the credit standing of the issuing bank and to mitigate risk by replacing a foreign bank risk with a domestic bank risk

(4) Irrevocable Unconfirmed Letter of Credit: A L/C which has been advised through an advising bank, acting as an agent of the issuing bank, without however assuming any responsibility towards the beneficiary except for taking reasonable care to check the apparent authenticity of the documentary credit which it advises

(5) Revolving Letter of Credit: A type of L/C issued only once and through which the money made available to the seller, after being drawn within a stated period of time, will again become available in the future, usually under the same terms and without another L/C being issued Thistype of credit is used in connection with regular and ongoing purchases from a foreign supplier Revolving L/Cs may be revocable or irrevocable, and the revolving element may be linked to time and/or value

(6) Documentary Letter of Credit: A L/C where the issuing bank stipulates that certain

documents should accompany the draft These documents assure the applicant (buyer/importer)that the merchandise has been shipped, is in good condition and that title to the goods has beentransferred to the importer

(7) Negotiable Letter of Credit: A L/C issued in such form that it allows any bank to negotiate thedocuments

See also Irrevocable Negotiation Letter of Credit, Irrevocable Straight Letter of Credit, Back letter of credit, Red Clause credit, Green Clause credit, Standby Letter of Credit

Back-to-Français:Lettre de crédit (L/C)

Español:Carta de crédito

Letter of Credit -Traveller’s (circular):

A L/C issued on behalf of a customer who plans to travel extensively The customer pays for theL/C when it is issued and can request payments from the correspondent banks indicated by the issuing bank, during a specified period of time The correspondent banks will honour the drafts up to the amount of credit Each bank which honours a draft endorses the L/C with the date the payment was made, the bank's name, the amount drawn against the L/C and the charges to the issuing bank's account See also Advised L/C

Français:L/C lettre de voyage circulaire

Español:Carta di credito - Traveller's

Leverage:

A US term to indicate the degree to which a business is funded by loans rather than by

shareholders' equity (i.e the indebtedness of a firm compared to its equity structure) This is equivalent to gearing in UK terms

Français:Effet de levier

Español:Apalancamiento financiero

Leveraged buy-out (LBO):

The take-over/acquisition of a company, financed largely by debt (i.e loans and bonds) rather than equity The loans extended and the bonds issued to finance the take-over are usually secured against the assets and cash flow of the target company (i.e being bought) Due to the large amount of debt relative to equity in the newly bought company, its bonds are typically junk bonds

Français:Acquisition par effet de levier

Español:Compra apalancada de empresas

Leveraged lease:

A Lease arrangement whereby the lessor borrows a large proportion of the funds needed to purchase an asset and then grants the lender a Lien on such asset, together with pledging the

lease payments to secure the borrowing.

Français:Bail à effet de levier

Español:Arrendamiento apalancado

Liabilities:

A company’s obligations towards its creditors, suppliers, customers etc., as distinguished from those to its owners, partners or shareholders Liabilities consist of borrowed funds and must be paid in the short-, medium- or long-term Short-term debts, bank loans and overdrafts are often known as current liabilities With reference to banks, their liabilities are made up of deposits, bonds and bills Opposite: Assets

Français:Dettes

Español:Pasivos, obligaciones

Liability on bills of exchange:

A liability created by the signature on the bill of Exchange

Français:Dette sur lettre de change

Español:Obligaciones basadas en la letra de cambio

Licensing agreement:

A business agreement whereby one firm gives another the right to use assets such as

trademarks, patents, copyrights or other know-how, against the payment of a fee

Français:Contrat de licence

Español:Acuerdo sobre concesión de licencia

Licensing arrangement (in trade):

A procedure requiring potential importers or exporters to secure permission from government authorities in order to be able to conduct trade transactions

Français:Disposition relative à la licence (dans le commerce)

Español:Acuerdo de licencia

Lien:

A legal term indicating the right or claim of a creditor against the property of a debtor in

connection with secured debt financing The creditor is entitled to hold such property until the debt is paid or some other obligation is fulfilled

Français:Privilège, Droit de rétention, Nantissement

Español:Gravamen, prenda, privilegio

Lien in rem, right of lien:

A restricted right to hold and retain a property until the creditor’s claim is satisfied If the claim is not met, the creditor is entitled to realize the property securing the lien and satisfy his claim out

of the resulting proceeds

Français:Droit de rétention

Español:Derecho prendario, derecho de retención

LIFFE (London International Financial Futures Exchange):

An exchange market dealing in futures contracts (on currencies, commodities, stocks,

bonds, treasury bills, etc.) Standardized financial futures have been traded on this exchange since 1982

Français:LIFFE (London International Financial Futures Exchange)

Español:LIFFE (London International Financial Futures Exchange)

Français:Allège, Péniche

Español:Barcaza, gabarra

Lighterage:

The cost of loading or unloading a vessel by barges

Français:Déchargement par allèges

Español:Gabarraje

Limit:

(1) The highest/lowest acceptable price for the purchase/sale of securities, where the

transaction may be conducted either directly or through a broker Price limits are set to avoid thedanger of adverse or unexpected price changes

(2) The upper limit for the utilization of a line of credit

Français:Limite

Español:Límite

Limited recourse financing:

A financing technique for major capital projects where the lender's decision to extend funds is based mainly on the project's assets as collateral and the expected cash flows and earnings as

a source of funds for repayment, rather than on the general creditworthiness of the borrower.Français:Financement à recours limité

Español:Financiamiento con derecho de recurso limitado

Line of credit:

A credit arrangement whereby the bank puts at its client’s disposal a maximum loan balance and agrees to finance within this balance several contracts subsequently entered into by the client Lines of credit may set up for miscellaneous capital goods purchases (usually known as general purpose lines of credit) or for contracts associated with one project (usually known as project lines of credit)

Français:Ligne de crédit

Español:Line of credit

Liquid assets:

Assets which can be readily and cheaply turned into cash, notably cash itself and short-term securities

Français:Actifs liquides

Español:Activos líquidos, valores realizables a corto plazo, disponibilidades líquidas, haberes líquidos, fondos líquidos

The speed with which a financial asset may be liquidated Within a company, it refers to the availability of liquid funds, which may be used to honour its payment obligations on time or to finance new projects In a broader sense, it refers to the width of a country’s financial markets: amarket is said to be liquid when the level of trading activity is high, thus allowing buying and selling with minimum price disturbance

Français:Suffisance de liquidités

Español:Suficiencia de liquidez

Liquidity preference:

The inclination of individuals and corporations to keep their assets in varying degrees of liquidity.One argument is that greater liquidity allows better investment flexibility at times of market upheaval

Français:Préférence pour les liquidités

Español:Preferencia por la liquidez

Français:Rapports, ratios de liquidités

Español:Coeficientes de liquidez

Liquidity risk:

The risk arising from the difficulty of liquidating (i.e selling) an asset It consists of the differencebetween the true value of the asset and the likely sale price, less commissions

Français:Risque de liquidité

Español:Riesgo de liquidez, riesgo de tesorería

Listed stocks:

Stocks which are traded on an exchange

Français:Actions cotées

Español:Acción registrada en bolsa, cotizada en la bolsa

Loan against pledge:

A loan secured by the pledging of collateral, such as securities, merchandise, etc

Français:Prêt contre nantissement

Español:Préstamo contra prenda

Loan against pledged bill:

A loan secured by the pledging of a bill of Exchange , blank endorsed by the customer

Français:Prêt contre nantissement d'effets

Español:Préstamo contra letras en prenda

Loan stock:

That part of a company's capital which is raised through interest-bearing long-term loans and theissue of bonds See Debenture Compare with Equity

Français:Emprunt obligataire

Español:Obligación sin garantía

Local bill:

A bill of Exchange accepted by a bank for collection or discounting, which is payable where the accepting bank is located

Français:Effet local

Espađol:Letra nacional

Local costs:

The costs incurred by the supplier in the buyer's country for locally sourced goods and services, necessary for the performance of the export sales contract These costs are not usually covered

by Export Credit Agencies' finance and guarantees

Français:Cỏts locaux

Espađol:Costo en moneda nacional

Lombard loan (UK); Collateral loan (USA):

A loan granted against the pledging of securities (broker's loan) or goods (advance against goods as security) It carries interest based on the Lombard rate

Français:Prêt Lombard (GB), Prêt garanti (USA)

Espađol:Lombard préstamos

Lombard rate:

An interest rate used for private credit lines (Lombard loan) In some countries the rate is published

Français:Taux Lombard

Espađol:Tasa Lombard; Tasa de préstamos con garantía prendaria

Lomé Convention:

An agreement concluded at Lomé, Togo in 1975, to which several additional agreements have subsequently been added The Convention enables market access preferences, as well as a package of technical and financial assistance programmes, to be extended by the European Union to African, Caribbean and Pacific (ACP) countries (mostly former colonies of the EU members).

Français:Convention de Lomé

Español:Convenio de Lomé

London Club:

A creditor cartel of private commercial banks, set up in the early ‘80s to deal with debt

rescheduling The Paris Club, while also concerned with debt repayment from developing countries, is an association of official creditors

Français:Club de Londres

Español:Club de Londres

London Interbank Offered Rate (LIBOR):

The London interbank base borrowing rate, i.e the interest rate for large interbank transactions

in the international banking market (e.g Eurodollars and Eurocurrency markets) It is a floating rate, varying according to market conditions and depending upon the loan period as well as the currency of reference (usually specific periods of time, such as one, three or six months) See also Interbank Offered Rate

Français:Taux interbancaire offert à Londres

Español:Tipo de interés interbancario en el mercado de capitales de Londres (LIBOR)

London International Financial Futures Exchange:

See LIFFE

Français: London International Financial Futures Exchange

Español:London International Financial Futures Exchange

Long hedge:

The purchase of a futures contract in anticipation of the actual purchase on the cash market It isfrequently practised by processors or exporters as a protection against an increase in the cash price Opposite of Short hedge See alsoHedge.

Français:Acheter à terme

Español:Cobertura con posición larga

Long position:

In the securities or commodity trade, the position of owning or holding more of a given security

or commodity than one has contracted to deliver in future (i.e the number of contracts bought exceeds the number of contracts sold) One goes long in the expectation that prices will rise, so

as to realize a profit from the sale of the underlying security or commodity Opposite: short position

Français:Position en titres ou en devises

Español:Posición larga

Long term:

Usually any credit period over five years

Français:Long terme

Español:Largo plazo

Long-term debt:

For a development bank this refers to obligations (such as loans and bonds) with a maturity of more than five years from the date of issue For a commercial bank long-term debt is that of oneyear or longer

Français:Dette à long terme

Español:Deuda a largo plazo

Long-term debt ratio:

An indicator of financial gearing/leverage It is determined by dividing long-term debt by the capital available, i.e the sum of long-term debt, preferred shares and common shareholder equity

Français:Ratio d'endettement à long terme

Español:Coeficiente de endeudamiento a largo plazo

An old fashioned name for vostro account

Français:Compte Loro

Español:Cuenta loro

Lump sum:

A fixed sum agreed at the initiation of a contract, payable for the performance of a specific task

It is frequently used to define payment for services

Français:Somme globale/forfaitaire

Español:Suma global, monto global, suma fija

M

Management Fee:

A fee charged by a commercial bank or an ECA for the arrangement of a financial facility Sometimes called arrangement fee or negotiation fee

Français:Honoraires, commission de direction

Español:Comisión de dirección, comisión de gestión

Manufacturing period:

The period during which goods are manufactured, extending from the signature of the contract

to the shipment of the final items

Français:Période de fabrication

Español:Tiempo de fabricación

Français:Compte de marge

Español:Cuenta de margen, cuenta de adelantos

Margin call:

A demand by a securities broker or a futures clearing house for additional funds to offset position losses on a margin account for securities or financial futures

Français:Appel de marge

Español:Cobertura complementaria, margen complementario

Marine Insurance:

An insurance covering loss or damage of goods at sea Marine insurance will compensate the owner of the goods for losses sustained due to fire, shipwreck, piracy and various other causes, beyond those losses which can be legally recovered from the carrier The most common types

of marine insurance coverage are the All Risk Coverage, Free of Particular Average and With Average

Français:Assurance maritime

Español:Seguro marítimo

Market access:

The openness of a national market to foreign products, reflecting the government's willingness

to allow imports to compete freely with domestically produced goods and to limit the existence ofbarriers to free trade

Français:Ouverture du marché

Español:Accesibilidad del mercado

Market discount rate:

Also called private discount rate See prime rate

Français:Taux d'escompte du marché

Español:Market discount rate

Market disruption:

When a flow of imports of a particular product prompts a significant decline in the sales of domestically produced goods, causing major economic difficulties for domestic producers

Français:Rupture du marché

Español:Desorganización del mercado, perturbación del mercado

Market maker:

A Dealer who buys and sells securities for his own account, without necessarily being

immediately able to match a buyer and a seller Market makers can have a major influence on trading

Français:Teneur de marché

Español:Creador de mercado

Market value:

The price at which goods or securities are traded on the market (in the case of shares or bonds the reference market is the stock exchange) It may also refer to the value investors believe a firm to be worth, calculated as the number of outstanding shares multiplied by the price at which shares are traded on the market

Français:Valeur du marché

Español:Valor de mercado, valor de venta, cotización

Français:Garantie négociable

Español:Garantía corriente, garantía negociable

Matching:

In banking, this indicates the ability of a bank to match a loan by taking a deposit of the same maturity A bank with matched books is one where the distribution of maturities of its assets and liabilities are the same In export credit insurance, the term refers to the capacity of an export