Pari passu is a Latin phrase meaning on equal footing. In finance and lending, it describes two or more obligations or creditors that rank equally, so none has priority over the others.
Where the term appears
You may see pari passu in loan agreements or company finance documents. It signals that certain debts or claims are treated equally, for example if a company has several lenders that share the same ranking.
- It means equal ranking among the parties it covers.
- No party in a pari passu group is paid ahead of the others.
- It is most relevant where a company has more than one creditor.
Why it can matter
Ranking affects the order in which creditors are dealt with if a company runs into difficulty. Knowing whether obligations rank equally or in a set order helps a business understand its overall position across different facilities.
Credicorp lends only to UK limited companies and LLPs for business purposes. Whether any ranking term applies to a Credicorp facility is set out in your agreement, so check the wording or ask our team. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply.
See also: What is yield on a loan?, What is amortisation?, Glossary: amortisation.