Hi, One of the factors influencing the credit risk premium is 'the level of security' - fixed or floating charge Can I just check my understanding of this... If the lender (investor) has a fixed charge, they have rights over whether the corporate company issuing the bond sells the fixed asset... ... where as if the lender has a floating charge, the corporate company can change their assets without the lender knowing? Thanks
Hi AKS01 Your understanding is correct. Usually (you can assume this is the case for CP1), a borrower has to ask permission from the lender with the fixed charge before it can sell the asset with a fixed charge on it. This is not needed for assets under a floating charge.
