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Definition: Prime Underwriting Facility
Prime underwriting facility is a kind of revolving underwriting facility. Now a revolving underwriting facility is a form of revolving credit, in which a team of underwriters agrees to give mortgage loans in case of a borrower being unable to sell in the Eurocurrency market. These loans are normally given through the buying of short-term Euro notes.
Prime underwriting facilities put the lender's yield against the bank's prime rate. Almost all prime underwriting facilities are short-term notes of one or the other type.
The normal prime underwriting facility is generally a note with a maturity which can be anything from one to three years. In some cases, the lead bank would not be in a position to place the loan. When this occurs, it will ask the underwriter of the facility to pay for the balance of the credit.