// definition
Credit enhancement
Contractual protection for a debt claim
Short definition
Protection for a debt claim through resources or commitments that absorb losses before its holder: subordination, overcollateralisation, a reserve or a guarantee, depending on the structure. Its effect depends on the amount available, payment priority and contractual terms. The security’s rating also takes the portfolio and the wider structure into account.
risk atlas
Knowledge map
Related analyses
- Private credit: a new route to insurersDebt seniority, available cash flows and prudential treatment of rated feeders.
Related guides
Primary sources
- Fitch, Feeder Fund Debt Rating Criteria, 24 September 2025Pages 5–7: credit enhancement, liquidity, master-fund debt and cash-flow allocation. General methodology.
- NAIC, SSAP 26, version effective January 2025Paragraphs 6 and 10: creditor relationship, underlying equity interests and substantive loss protection.
- SEC / Investor.gov, ABCs of Credit Ratings, 12 October 2017Credit-risk scope and distinction from market price and liquidity.