haircut

1. (law, business) A partial loss, financially: thus, in a bankruptcy proceeding, the proportional reduction in the debt that will be paid to each creditor (based on an evaluation of the total debt owed and the total assets of the debtor); among investors, the negative return on investment from a losing proposition.Examples: "to take a haircut"; "And he needs to make sure that any American bank that was involved in loans to Asia, and now wants to share in the I.M.F. bailout, takes a haircut. And I'm not just talking about a trim."; "Its president, Nestor Kirchner, was expected to confirm overnight that about 75% of the country's bondholders had agreed to swap their old debt for new at a loss of up to 70 cents in the dollar—also a record and one that Mr Kirchner has called “the biggest haircut in history” for investors."

2. (finance) The difference between the value of a loan and the value of its collateral.Examples: "Government securities having high credit rating such as Treasury bonds and Treasury bills are usually subjected to 1% to 10% haircut, while for more risky, volatile or illiquid securities, such as a stock option, the haircut might be as high as 30%."Synonyms: margin