Forfaiting Glossary

Glossary Items beginning with : P


An organisation which is indirectly controlled by a government.

Pari Passu

A Latin phrase that means “with an equal step” or “on equal footing”. It is sometimes translated as “ranking equally”. Such covenant is incorporated into the documentation to ensure that the obligor’s indebtedness under the respective instrument would at least rank equally with all other unsecured indebtedness of that borrower.

Payment Under Reserve

A forfaiter may agree to purchase a transaction even before examining the relevant documentation. In the event that such conditions to ensure the purchase of a payment obligation is a legal, valid, binding and enforceable obligation of the relevant obligor are not met then the buyer has the right to rescind the purchase. It is important that such points of reserve are specified in the relevant confirmation together with a date when such reserve items have to be delivered. Article 12 of the URF deals with payments under reserve.

Performance Bond

A guarantee to a buyer that the supplier will comply with the terms of a contract.

Political Risk

The risk of borrower-country government actions preventing or delaying payment of funds due to parties in other countries. Many government export credit agencies also include war, civil war, revolution, or other military or civil disturbances in their definition of political risk. Some also include physical disasters such as cyclones, floods or earthquakes.

Pre Shipment Financing

Is usually short-term funding to fund the inventory and production cost associated with manufacturing goods for export


The cost to the buyer of an insurance policy.

Presenting Bank

This is the bank which presents documents under a Collection or a Letter of Credit to the Collecting Bank or nominated bank.

Primary Forfaiter

Under the URF, the party that first purchased the payment claim under the respective receivable from the initial beneficiary.

Primary Market

Under the URF, the market where the payment claim is purchased by the primary forfaiter from the initial seller.