Highly Confident Letter
Definition
A highly confident letter is an investment bank’s written statement that it is "highly confident" it can raise the financing for a proposed deal, short of a binding commitment but strong enough to make a bid credible. Drexel Burnham invented it in the 1980s.
In practice
The letter solved the raider’s chicken-and-egg problem: no one lends without a credible bid, and no bid is credible without financing. Drexel’s reputation made its letter as good as money, which put billion-dollar targets within reach of unknown buyers.