A technique to lower the interest payments on a bond by raising the issue's credit rating, often through insurance in the form of a financial guarantee or with standby letters of credit issued by a bank.

"Credit Enhancement" In Context

"The rating is based upon the quality and seniority of the portfolio of assets along with the credit enhancement available to the class A notes through subordination, the application of excess spread, and other structural protection features. In Fitch's ..."