Reference Entity

Posted in Finance, Accounting and Economics Terms, Total Reads: 401

Definition: Reference Entity

Reference entity is the party who bears the credit risk in case of a contract. Basically this is the party who takes out a contract or becomes a party in a contract (e.g. bonds, debt instruments) but most importantly it agrees to pay in case there is default.

Reference Entity basically insulates the credit risk in the contract. Reference entity can be anyone e.g. company, legally authorized agency etc.

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