This document provides information about a team project and discusses various topics related to commercial mortgage backed securities (CMBS). It begins by listing the names of three team members. It then covers collateralized mortgage obligations (CMOs), stripped mortgage backed securities, commercial mortgage loans, and commercial mortgage backed securities. For each topic, it provides definitions and discusses structures, risks, and other considerations.
Actionable trade ideas for stock market investors and traders seeking alpha by overlaying their portfolios with options, other derivatives, ETFs, and disciplined and applied Game Theory for hedge fund managers and other active fund managers worldwide. Ryan Renicker, CFA
Actionable trade ideas for stock market investors and traders seeking alpha by overlaying their portfolios with options, other derivatives, ETFs, and disciplined and applied Game Theory for hedge fund managers and other active fund managers worldwide. Ryan Renicker, CFA
An Income Mutual Fund is a long Term Fund that typically invests in long duration GOI securities; corporate bonds both PSU and private and other money market instruments of different maturities with an objective to generate regular income and capital appreciation.
Most simply, bonds represent debt obligations – and therefore are a form of borrowing. If a company issues a bond, the money they receive in return is a loan, and must be repaid over time. Just like the mortgage on a home or a credit card payment, the repayment of the loan also entails periodic interest to be paid to the lenders. The buyers of bonds, then, are essentially lenders. For example, if you have ever bought a government savings bond, you became a lender to the federal government. Put differently, bonds are IOUs.
An Income Mutual Fund is a long Term Fund that typically invests in long duration GOI securities; corporate bonds both PSU and private and other money market instruments of different maturities with an objective to generate regular income and capital appreciation.
Most simply, bonds represent debt obligations – and therefore are a form of borrowing. If a company issues a bond, the money they receive in return is a loan, and must be repaid over time. Just like the mortgage on a home or a credit card payment, the repayment of the loan also entails periodic interest to be paid to the lenders. The buyers of bonds, then, are essentially lenders. For example, if you have ever bought a government savings bond, you became a lender to the federal government. Put differently, bonds are IOUs.
Brief overview of Debentures & Bonds and Term Loans.
A project given to our class group for the subject Corporate Finance. Hope it helps.
Contact for additional information
www.facebook.com/Sahith1
ansahithkrishna@gmail.com
the cost of capital of a company describes the return expected by creditors of funds to companies. It includes the cost of equity, debt, hybrid and WACC
This is the presentation deck from Real Estate Investing 101: Financing, PeerRealty's fourth in a series of on-demand educational videos. In this series, PeerRealty Head of Investments Jeff Rothbart takes viewers through the fundamentals of real estate investing, and discusses some of the key metrics that real estate investors should consider. This Financing course analyzes the different types of debt instruments that investors can expect to find in real estate deals. It also discusses common loan agreement provisions, and explains how they can affect your real estate investment.
You can view this webinar at http://resources.peerrealty.com/real-estate-investing-101-financing
A great primer on Financial Restructurings prepared by Valerio Ranciaro, General Director from SACE, covering everything you need to know from analyzing the capital structure of a company, to the procedures in financial restructure, to a case study of the restructuring of Telecom Argentina.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
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when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
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Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
4. Definition
Security backed by a pool of Pass- through, whole loans, or
stripped Mortgage Backed Securities
Structured in such a way that they include several classes of
bondholders with varying stated maturities
Objective
Bond classes created by redirecting cash flows of Mortgage-
related products so as to ‘mitigate’ (not eliminate) prepayment risk
associated with Pass- throughs
• Transfers this risk among different classes of bondholders
Parties who can better handle one type of risk (extension or
contraction) invest in ones best for them
Exception: Pay- through securities
• More than one class of bondholders with the same level of credit priority
NOTE: Whole loans are usually larger in size than the maximum amount allowed within
GNMA, FNMA and, FHLMC's standards 4
5. Classified into different Bond classes referred to as tranches
Principal payments from the underlying collateral are used to
retire the tranches on a priority basis according to terms specified
in the prospectus
Interest Payment is periodic coupon interest on the amount of
outstanding principal at the beginning of each period
5
6. Sequential- Pay CMOs
• Each class of bond retire sequentially
• Periodic interest to all tranches with first tranche receiving all
principal payments (expected and prepays)
• principal pay-down window – time period between beginning and
ending of principal payments for specific tranche
Cash Flow from Tranches on the basis of specific rules
Pass-through securities for coupon and principal payment
Accrual Bonds
• At least one tranche does not receive current interest per month but the
interest is added to the principal balance (the bond is similar to zero coupon
bond
• The interest is used to speed up the pay down of the principal balance of the
earlier bond classes
6
7. Floating Rate Tranches (Combination of Floaters &
Inverse Floaters):
• Partitioning between the floater and inverse floater is driven by the
demand of the investors
• Coupon Rate on Floater = LIBOR+ pre-determined rate (fixed)
• Coupon Rate on Inverse Floater= K-L*(one-month LIBOR)
K= Cap or maximum coupon rate for the Inverse Floater
L= Coupon Leverage
• The higher the coupon leverage, the more the inverse floater’s coupon
rate changes for a given change in one- month LIBOR
Low leverage (0.5 to 2.1)
Medium- leverage (more than 2.1 but lesser than 4.5)
Higher Leverage (higher than 4.5)
Objective of issue:
• Matches their liability schedule to the prepayment schedule
7
8. LIBOR is never negative hence the Coupon Rate of
Floating Rate Bond cannot be negative
If there are no restrictions on the inverse floater rate
then there is a possibility of negative coupon rate
• For example:
CAP= 28.5% and Coupon Leverage= 3
If the LIBOR becomes 10% then the coupon rate would become as
follows:
28.5%- 3*10%= 28.5%- 30% = - 1.5%
8
9. PAC Bonds
• Low Contraction and Extension Risk
• Allows greater certainty of timing of CFs
Support/ Companion Bonds
• Forego the scheduled principal repayment
• Do not receive any principal until the PAC bonds receive the
scheduled principal payment that are made
• If paid off due to faster-than-expected pre payments then there
is no longer any protection on PAC bonds
Busted – Term used to denote the break of a PAC schedule
9
10. Determination of Monthly schedule of Principal Repayments
• Minimum (Low Collar)and Maximum (Upper Collar) Prepayment
speeds are assumed till the outstanding principal balance is paid
off
• Minimum Principal payment is determined
Average Life of PAC Bonds varies with the nature of the bond
• For Superior Bonds the effective collar is higher as compared to
the support bonds
Note:
Initial collar is the range of two speeds used to create a PAC bond
Effective collar is the range of PSA in which the average life remains stable
10
11. PAC buyers prefer tight windows
Institutional investors prefer a window which matches
its liability schedule
Investor demand drives the PAC windows that the
issuers will create which in turn is driven by investor
liability schedules
11
12. Lockout PAC Structure
• Issue fewer PAC bonds relative to support bonds
• No principal payments to a PAC bond class in the earlier years
in order to create more Support bonds
Reverse PAC Structure
• Any excess principal payments to be made to the longer PAC bonds
after all support bonds are paid off is called a Reverse PAC Structure
12
13. Schedule of principal repayment
Single PSA Rate
Has protection against only Contraction Risk
For institutions not overly concerned with some
extension risk but greatly concerned with contraction
risk
13
14. Schedule of principal repayment
Single PSA Rate
Has protection against only Extension Risk
For institutions not overly concerned with some
contraction risk but greatly concerned with extension
risk
14
15. The interest accrued on accrual bonds are used to pay off
the principal and interest of the VADM bonds
Provides protection against extension risk even if
prepayments slow down because the interest accrued on Z
bond will be sufficient to pay off the scheduled principal
and interest on VADM bond
The maximum final maturity can be determined with a high
degree of certainty
If prepayments are high resulting in the supporting bond
being paid off faster a VADM bond can shorten
Compared with PACs they have greater absolute protection
against extension risk
Structures that include these bonds have do not have much
significance of contraction risk
15
16. Principal- only
• All principal are paid to one bond class
Interest- only
• All interest payment are done to another bond class
16
17. In practice the coupon rate of each tranche is different depending
upon the term structure and the average life of the tranche
In earlier CMO deals the excess interest between the coupon rate
on the tranches and coupon rate on the collateral was paid to an
equity class referred to as the CMO Residual
Now a tranche is created which receives the excess coupon
interest known as Notional Interest- only class or Structured IO
Notional Amount for 7.5% IO= (Tranche par value*excess
interest)/0.075
Excess interest= collateral coupon rate- tranche coupon rate
17
18. Coupon Rate of the collateral= 7.5%
Tranche Par Amount Notional Coupon Rate (%)
Amount
A 194,500,000 6.00
B 36,000,000 6.50
C 96,500,000 7.00
Z 73,000,000 7.25
IO 52,566,667 7.5
Total 400,000,000
TRANCHE A:
Notional Amount for 7.5% IO= (194,500,000* (0.075-0.06))/0.075= 38,900,000
TRANCHE B:
Notional Amount for 7.5% IO= (36,000,000*(0.07-0.06))/0.075= 4,800,000
TRANCHE C:
Notional Amount for 7.5% IO= (96,000,000*(0.065-0.06))/0.075= 6,433,333
TRANCHE Z:
Notional Amount for 7.5% IO= (73,000,000*(0.0675-0.6))/0.075= 2,433,333
18
19. Bonds providing prepayment protection to PAC tranches
Exposed to greatest level of prepayment risk
Support bonds are classified into different bond classes
• Sequential- pay support bond
• Floaters
• Inverse Floaters
• Accrual support bond
Support bonds that are pack bonds can be created (PAC II
Bonds) with a PAC schedule of repayment
PAC II Bonds have greater prepayment protection than the
support bond classes without the schedule of principal
repayments but lesser Prepayment Protection than PAC I
Bonds
19
20. CMOS can be considered to be a business entity
• Assets are the collateral (Pass- through or pool of mortgage loans)
• Liabilities are the payments due to the CMO Bond Classes
• Liability obligation : the Par value and the periodic interest payment
that is owed to each class of bond
Agency CMOs: Issued by Freddie Mac, Fannie Mae or Ginnie
Mae
Non- Agency CMOs: Issued by a private entity
• Private Label CMOs: The underlying pool of pass throughs are
guaranteed by an agency
• Whole Loan CMOs: Pool of unsecuritized mortgage loans
20
21. A provision of Tax Reforms, 1986 called Real Estate
Mortgage Investment Conduit (REMIC) specifies the
requirements that an issuer must fulfill so that the legal
entity created to issue a CMO is not taxable
Not all CMOs are REMICs
21
22. 1. Synthetic- coupon Pass- throughs
2. Interest- only/ Principal only Pass- through Securities
1. Synthetic – coupon Pass- throughs
Unequal distribution of coupon and principal results in a synthetic
coupon rate that is different from that of the underlying collateral
22
23. 2. Interest- only / Principal- only securities
• Principal- only securities
With a fall in the mortgage rates the principal prepayments become faster
leading to a rise in the cash flows which are discounted by a lower interest
rate and hence the price of a PO rises
With an increase in the mortgage rates the principal prepayments become
slower leading to a deterioration in the cash flows which are then discounted
by a higher interest rate and hence the price of PO falls
• Interest- only securities
With a fall in the mortgage rates the outstanding balance of principal
prepayments fall and hence the interest amount will fall leading to a fall in the
price of IO
With a rise in the mortgage rates the outstanding balance of principal
prepayments rise and hence the high interest amount will rise leading to a
rise in the price of IO
23
25. Commercial Mortgage Loans
• Definition
• Indicators of Potential Performance
• Call Protection
• Balloon Mortgage Provisions
Commercial Mortgage Backed-Securities (CMBS)
• Types of Deals
• Servicer
• Analysis of The Collateral
25
26. Commercial Mortgages loans are for income
producing properties
Includes:
• Multi-family Properties
• Office Buildings
• Shopping Centers
• Hotels
• Health Care Facilities
• Industrial Properties
Commercial Loans are Non-Recourse loans
26
27. Potential Performance Measures
• Debt Service Coverage Ratio
NOI/Debt Service
Higher the Ratio better it is
• Loan-to-Value
Expected cash flows are plotted
Discounting rate referred as “Capitalization Rate”
Analysts are skeptical about estimates of market value and resulting
LTV’s reported for properties
27
28. Call Protection to counter the risk of Prepayment
Call protection Methods
Prepayment Lockouts
Defeasance
Prepayment Penalty
Yield Maintenance Charge
28
29. Commercial Loans are usually Balloon Loans
Balloon Risk or Extension risk :
Failure of borrower to refinance balloon payment
Measures to counter the Balloon Risk
• Internal Tail
• External Tail
29
30. Single Borrower/Multi Property Deals
• Features
Cross Collateralization
Cross Default feature
• In case of retiring of a property
Retirement should be greater then Asset value
DSC should be maintained
Multi Borrower Deals
• Fusion conduit Deal (for property greater then$ 50 mn)
30
31. A servicer is required to perform key functions like
collecting monthly loan payments, maintaining escrow
for taxes & insurance, preparing reports for trustee etc.
Types of Servicers:
• Sub- Servicer
• Master Servicer
• Special Servicer
Notes:
Banc of America commercial mortgage series 2001-1, GMAC is
the master servicer. Lenner Partners is the special servicer in
above series.
31
32. CMBS are non-recourse in nature hence proper
evaluation should be done
Key checks
Performance Indicators of Property
Property Type
Geographical Distribution of Properties
32
33. Key Factors to be considered
Number and Quality of tenants
Physical Attributes of Building
Business Location
Strength and nature of Local Economy
33