Jiménez, Gabriel; Lopez, Jose A.; Saurina, Jesús - Federal Reserve Bank of San Francisco - 2009
Managing the credit risk inherent to a corporate credit line is similar to that of a term loan, but with one key … difference. For both instruments, the bank should know the borrower's probability of default (PD) and the facility's loss given … default (LGD). However, since a credit line allows the borrowers to draw down the committed funds according to their own needs …