Risk, repayment and tone do not describe all credit structures. These are terms that are present in other forms. Loans must be repaid in less than a year. They are generally used for working capital requirements and can range from one month to one year. Medium- and long-term debts offer more traditional payment structures. A medium-term loan is granted to tenors between one and five years, while long-term loans are granted with tenors of more than five years. Differences in long-term debt structures result from differences in the risk level of the loan. To do this, Emma buys and sells short- and medium-term financial instruments with tenors of 1 to 5 years. It does so in the corporate bond market and through counterparty transactions with different counterparties. For example, if a 10-year government bond were issued five years ago, its term would be 10 years, and its tone – the time remaining until the end of the contract – would be five years. In this way, the tone of a financial instrument decreases over time, while its lifespan remains constant. Depending on risk tolerance and financial objectives, some investors may even systematically avoid securities longer than the specified period.
For example, an entity that wants to meet its short- and medium-term liquidity needs could buy and sell debt securities for five years or less. In this context, adjustments could be made on the basis of the solvency of the counterparties concerned. For example, an entity could accept a five-year tone for high-rated counterparties, while limiting misjudged counterparties to tenors of three years or less. The structure of the loan is also based on the content of the loan. Short-term loans can take on very different structures compared to medium- to long-term loans. Amortized loan: a amortized loan is repaid until the end of its contents, for an amount equal to that of principal and interest. The term tenor is also used for atypical financial instruments such as derivative contracts.