All Good Debt Investors Speak Latin

People who say Latin is a dying language haven't spend much time around lawyers or debt investors.

You can see a number of Latin phrases interspersed throughout bond indentures, used during liability management exercises (LMEs), and during financial analyst calls with company management.

So, grab your toga and keep reading to see our list of the top Latin phrases you need to know if you are going to be an intelligent debt investor.

Pari Passu

Translation: "on equal footing"

Meaning/Use: In finance, "equal footing" means that two or more parties to a financial contract or claim are all treated the same. Pari passu is common in bankruptcy proceedings as well as debts such as parity bonds, in which each party receives the same amount.

Ad Hoc

Translation: “for this purpose”

Meaning/Use: Ad hoc committees are self-formed groups of creditors that have managed to identify themselves, either through bilateral contacts between institutions or through the outreach of financial or legal advisers, and that will coordinate among themselves and the debtor on the implementation of a workout.

Caveat Emptor

Translation: “let the buyer beware”

Meaning/Use: Potential buyers are warned by the phrase to do their research and ask pointed questions of the seller – signalling the individual buys at their own risk. Caveat emptor is a common law doctrine that places the burden on the buyer to reasonably examine an asset before purchase.

Per Annum

Translation: “for each year”

Meaning/Use: The per annum interest rate refers to the interest rate over a period of one year with the assumption that the interest is compounded every year.

Pro Forma

Translation: “for the sake of form”

Meaning/Use: Pro forma is used to indicate periodic financial forecasts into the future using certain projections or assumptions.

Ceteris Paribus

Translation: “all else being equal”

Meaning/Use: Ceteris paribus is a broad term that defines which variables are changing or which variables are remaining the same in a given situation. Often, to isolate only one variable, financial analysts cite ceteris paribus to clarify that their assumptions on a given outcome are only valid if all other variables remain the same.

It is important to know the genesis of different words, terms and conventions in order to truly understand their meaning.

As Winston Churchill famously declared, "those who do not learn from history are doomed to repeat it."