Credit enhancement refers to a credit enhancement measure. For example, if an enterprise wants to reduce the financing cost, it can choose to increase the credit before the loan, because the bank will rate the enterprise before the loan, and decide different loan interest according to different rating grades. After introducing high-quality enterprises or guarantee companies, we will guarantee our own loans, improve the credit rating of enterprises, and achieve the purpose of reducing interest.

1. Bond is a kind of credit product, which is a debt certificate issued to investors when the government, financial institutions and industrial and commercial enterprises directly borrow money from the society to raise funds, and promises to pay reference interest at a certain reference interest rate and repay the principal according to the agreed conditions. Its issuance, liquidity and pricing mainly depend on the principal and interest repayment ability of the issuer and the guarantee ability of credit enhancement measures. There are many ways to increase the credit of bonds, among which the most common ones are third-party guarantee, collateral guarantee, bond insurance, bond trust and credit reserve. Bond issuers can improve the credit rating, enhance the bond credit, reduce the default rate of bonds or reduce the default losses through various credit enhancement means or measures, thus reducing the default risks and losses borne by bondholders.

2. Through credit enhancement, enterprises with low credit rating can obtain financing, and bond investors also get multiple guarantees. There are many ways to increase the credit of bonds, among which the most common ones are third-party guarantee, collateral guarantee, bond insurance, bond trust and credit reserve. Not only bonds, but also "credit enhancement" is often needed when we borrow from banks. We can see that large enterprises not only have easy access to loans, but also have low reference interest, because their credit ratings are high. Small and medium-sized enterprises with relatively low credit rating often need to introduce high-quality enterprises or guarantee companies to guarantee them in order to obtain loans or reduce financing costs, so as to improve their credit rating, which is also a means of increasing credit.

3. What is the significance of increasing credit?

(1) enables enterprises with low credit ratings to raise funds through the bond market, which greatly saves financing costs;

(2) It can provide multiple guarantees for bond investors, and even if there is a breach of contract, it can also compensate by taking back the guarantor and disposing of the collateral;

(3) It can effectively disperse market risks and improve the financing efficiency of the bond market.