Magister Operis · Financial Knowledgebase

Loan-to-Value (LTV)

What loan-to-value really measures, the factors that move it, and how recourse and non-recourse change the picture.

The amount of LTV awarded to an asset will factor various considerations such as

  • the description of the asset
  • the world market
  • the financial strength of the asset
  • the quality of the use of funds from monetization
  • the criteria of the lender, trader, and/or funder

RECOURSE VS. NON-RECOURSE

A monetization loan is typically a full recourse loan. The funds have to be paid back. 

It is true that a trade program can retire/pay off the monetization loan making the overall transaction non-recourse. But for the monetization bank's books... the quality of the use of funds has to support paying off the monetization loan on its own without any trading activities. 

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