Forfaiting Glossary

Glossary Items beginning with : A

Aval

An unconditional, irrevocable, and freely assignable/transferable guarantee to pay on the due date, added to a Bill of Exchange or Promissory Note by writing the words ‘For Aval’ or ‘Per Aval’ or similar. Avals are normally only permitted in civil law countries and not in countries whose law on negotiable instruments stem from English law.

Avalor/Avalising Bank

An institution or person who signs an aval.

Average Life

The average life refers to an evaluation of the average time an asset will be outstanding given a specific repayment profile e.g. a loan of $100 with a tenor of 2 years but with a principal repayment of half of the principal at one year and the remainder on the maturity date will have an Average Life of 1.5 years.