comfort letter

Definitions (3)
Popular Terms
1. Banking: Informal letter from a bank indicating its willingness to support a customer with a short-term loan, if and when required. It is not a letter of commitment.
2. Corporate affairs: Parent-firm's letter, issued to reassure a subsidiary-firm's lender or supplier, that it would support the subsidiary in case of financial difficulties. Specific terminology used in the letter determines whether such assurance constitutes a binding contract or only a moral obligation. A comfort letter, however, does signify that the loan request is authorized, is in order, and that the parent firm will keep a careful eye on the entire transaction.
Also called letter of comfort, it may also be issued by a government to back up the obligations of its agencies.
3. Governmental affairs: Federal- or state- government's assurance (to the lender or supplier of a public agency or enterprise) that it will support the agency in timely settlement of its obligations.

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