Notice and specific disclaimer

This document contains brief definitions and, where appropriate, analysis of certain types or classes of corporate debt instruments; some of which are relatively novel and for which definitions are not or do not appear to be widely published. The nature of a debt instrument is, in many cases, a product of private negotiations between the borrower and the lender or a class of lenders such that any given debt instrument may fall within the scope of a number of different type or class definitions; and may involve exceptionally complex risk profiles. Accordingly, the author is unable to accept any responsibility whatever in connection with the definitions or any analysis offered in relation to any particular type or class of debt instrument.


A bond is a form of loan security which comprises an agreement by the Issuer to pay the bondholder (the "Bondholder") a specified amount on a date fixed in the future (the "Maturity Date") subject to periodic payments of a coupon, or interest payment (the "Coupon").

Resettable Bonds

A resettable bond is a bond that is "reset" on a given date or regular intervals thereafter (the "Reset Date") unless the Issuer redeems the bond by paying the principal amount, accrued interest and any arrears of interest to the Bondholder. A resettable bond therefore provides the Issuer with a form of renewable loan subject to automatic contractual adjustments that take effect on the Reset Date if the bond is not redeemed.

An example of a Resettable Bond is the series of Undated Subordinated Guaranteed Bonds issued by Clerical Medical Finance plc on 8 December 2000 in relation to £50,000,000, guaranteed on a subordinated basis by Clerical Medical Investment Group Limited.

Loan Notes

A loan note is a financial instrument that evidences the existence of a debt between a borrower (the "Issuer") and one or more lenders (the "Noteholder") and the promise, by the Issuer, to pay the amounts outstanding under the loan note to the Noteholder. The Issuer is liable to discharge the Loan Note in full on a date termed the maturity date (the "Maturity Date") and may be subject to interim payments of interest by way of periodic issue of a coupon (the "Coupon").

Convertible Loan Note

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Equity Loan Note

An equity loan note ("Equity Loan Note") is a medium-term debt security which is automatically converted to ordinary equity shares in the Issuer on the Maturity Date.

Before the Maturity Date, the Noteholder receives Coupons and enjoys a higher priority than ordinary shares in the event of the Equity Note issuer's liquidation by virtue of the Noteholder's status as a creditor of the Issuer before the Maturity Date.

Equity Loan Notes provide a combination of a guaranteed return on investment with the higher growth potential and risk that accompanies the acquisition of ordinary shares in a company.

Participating Loan Note

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Subordinated Loan Note

A subordinated loan note is a Loan Note which ranks, for interest and repayment, after other borrowings of a company.

Syndicated Loan

A syndicated loan is a loan provided by a group of lenders which is structured, arranged and administered by a commercial bank or investment bank known as an arranger.

Vendor Loan Note

A vendor loan note is a Loan Note that represents an element of the purchase price to be paid for a business or company that the vendor has agreed to defer.

Zero Coupon Loan Note

A zero coupon loan note is a Loan Note upon which no interest (or Coupon) is payable on a periodic basis. Instead, both principal and interest are paid by the Issuer to the Noteholder on the Maturity Date.