The word "collateralise" is correct and usable in written English.
It is a verb, meaning to provide or obtain something of value to act as a guarantee that a loan or obligation will be repaid. For example, "The lender collateralised the loan by requiring the borrower to put up their house as security."
If land used to collateralise much of their borrowing falls in value or is laid claim to by several lenders, that would probably prompt at least some financial entities to fail.To some extent, this shuffling of debt is a bit of an accounting shell game, says Michael Kurtz, head of China research for Macquarie Securities, an investment bank.
Or perhaps it was the high-level disappointment at her decision to front a series of advertisements for debt-consolidation company FirstPlus (collateralise your loans - lower interest rates now for possible homelessness later!), which she was urged by money-education charity Credit Action and others to stop endorsing.
Virgin, whose credit rating is lower than Qantas, calculates a government debt guarantee would raise Qantas's credit rating by at least two notches – saving the airline $60m a year in direct debt repayments and even more on the forward credit card sales that Qantas is required to collateralise.
The fastest growth came from private-equity groups, which raised $53 billion in three months, two-thirds more than a year earlier.As in other parts of the debt markets, the liquidity has been fed by the large number of investors willing to buy tranches of collateralised debt obligations or, in the case of leveraged lending, collateralised loan obligations, a market which has rallied since 2002.
Writing swaps on collateralised-debt obligations linked to mortgage-backed securities is a long way from pricing the risk of a hurricane or flood ravaging a factory.Mr Sullivan did himself no favours by mismanaging expectations.
Spreads have dramatically widened on the securities backed by riskier mortgages and the pooled and debt-laden collateralised-debt obligations (CDOs) based on them.
In contrast, issuance of collateralised-debt obligations (CDOs) has fallen dramatically.
And in this crash foreign-exchange, interest-rate and equity derivatives models have so far behaved roughly as they should.A muddle of mortgagesYet the idea behind modelling got garbled when pools of mortgages were bundled up into collateralised-debt obligations (CDOs).
Its estimate of an $8 billion-11 billion fourth-quarter hit on its collateralised-debt obligations was made in early November, since when the market value of subprime-related debt has declined further.
Retail loans are mainly collateralised, and used to finance purchases of cars and houses.
(For those who are still baffled, they are Collateralised Debt Obligations and Structured Investment Vehicles).The lesson of the year, in retrospect, was that our complex, interlinked global financial system has its drawbacks.
