Liabilities are obligations to transfer assets or provide services to other entities in the future as a result of past transactions. They are measured at their current cash equivalent value, with current liabilities due within one year and noncurrent liabilities due after. Accruals build up amounts in liability accounts over time for things like interest, wages, and deferred revenues where cash is received before being earned. Bonds payable are long-term debt that make periodic interest payments and pay par value at maturity. Companies consider ratings and market rates when issuing bonds to manage cash flows. Off-balance sheet liabilities include contingent liabilities, operating leases, and liabilities held in special purpose entities.
Bonds are debt securities where an issuer borrows money from an investor for a defined period of time. The issuer pays interest regularly and returns the principal at maturity. Key terms associated with bonds include the principal amount, coupon, price, yield, maturity, and credit quality. The credit rating of a bond provides a measure of the issuer's ability to repay the debt and allows investors to compare risk across different bonds. Bonds are issued in primary markets by sovereign governments, corporations, and other entities to fund expenditures, while existing bonds are traded in secondary markets between investors.
1) Credit linked structured products involve complex cash flows and risks that are not always clearly disclosed. They are used by banks to hedge credit risks through mechanisms like credit default swaps, credit linked notes, and collateralized debt obligations.
2) Collateralized debt obligations pool together debts from various issuers and divide them into tranches of varying risk and return. The cash flows from the debt pool are allocated to tranches in order of priority, with senior tranches receiving payments before more junior tranches.
3) Synthetic collateralized debt obligations use credit default swaps and high-quality collateral assets to replicate the cash flows of CDO tranches, providing another way for banks to structure credit products and transfer
The document discusses different investment options and their risk and return profiles, including stocks, bonds, and life settlements. It then provides details on how life settlement investments work, including purchasing a portion of a life insurance policy at a discount, with returns paid out when the insured passes away. Life settlements offer potential annual returns of 10-15% with very low risk of losing principal, providing diversification benefits compared to traditional markets like stocks and bonds.
The volatility in today’s financial markets is making it impossible to know where to invest and grow your money without the fear of losing your lifetime savings. Historic low interest rates are making is difficult to provide the income needed by investing in safer investments such as CDs and annuities. Investing a portion of your overall portfolio in fixed income investments should be considered as a solution to reducing volatility and providing needed income.
1) Credit risk mitigation aims to reduce credit risk through tools that alter the six factors that credit risk depends on: exposure at default, loss given default, probability of default, risk mitigation, concentration, and default dependency.
2) Two common methods for reducing exposure at default are bilateral netting, which allows offsetting exposures between counterparties, and principal amortization, which schedules principal repayment over the life of a long-term loan.
3) Most credit risk controls are implemented upfront through contractual terms, though some like credit default swaps and securitization are used after origination to transfer existing credit risk.
Liabilities are obligations to transfer assets or provide services to other entities in the future as a result of past transactions. They are measured at their current cash equivalent value, with current liabilities due within one year and noncurrent liabilities due after. Accruals build up amounts in liability accounts over time for things like interest, wages, and deferred revenues where cash is received before being earned. Bonds payable are long-term debt that make periodic interest payments and pay par value at maturity. Companies consider ratings and market rates when issuing bonds to manage cash flows. Off-balance sheet liabilities include contingent liabilities, operating leases, and liabilities held in special purpose entities.
Bonds are debt securities where an issuer borrows money from an investor for a defined period of time. The issuer pays interest regularly and returns the principal at maturity. Key terms associated with bonds include the principal amount, coupon, price, yield, maturity, and credit quality. The credit rating of a bond provides a measure of the issuer's ability to repay the debt and allows investors to compare risk across different bonds. Bonds are issued in primary markets by sovereign governments, corporations, and other entities to fund expenditures, while existing bonds are traded in secondary markets between investors.
1) Credit linked structured products involve complex cash flows and risks that are not always clearly disclosed. They are used by banks to hedge credit risks through mechanisms like credit default swaps, credit linked notes, and collateralized debt obligations.
2) Collateralized debt obligations pool together debts from various issuers and divide them into tranches of varying risk and return. The cash flows from the debt pool are allocated to tranches in order of priority, with senior tranches receiving payments before more junior tranches.
3) Synthetic collateralized debt obligations use credit default swaps and high-quality collateral assets to replicate the cash flows of CDO tranches, providing another way for banks to structure credit products and transfer
The document discusses different investment options and their risk and return profiles, including stocks, bonds, and life settlements. It then provides details on how life settlement investments work, including purchasing a portion of a life insurance policy at a discount, with returns paid out when the insured passes away. Life settlements offer potential annual returns of 10-15% with very low risk of losing principal, providing diversification benefits compared to traditional markets like stocks and bonds.
The volatility in today’s financial markets is making it impossible to know where to invest and grow your money without the fear of losing your lifetime savings. Historic low interest rates are making is difficult to provide the income needed by investing in safer investments such as CDs and annuities. Investing a portion of your overall portfolio in fixed income investments should be considered as a solution to reducing volatility and providing needed income.
1) Credit risk mitigation aims to reduce credit risk through tools that alter the six factors that credit risk depends on: exposure at default, loss given default, probability of default, risk mitigation, concentration, and default dependency.
2) Two common methods for reducing exposure at default are bilateral netting, which allows offsetting exposures between counterparties, and principal amortization, which schedules principal repayment over the life of a long-term loan.
3) Most credit risk controls are implemented upfront through contractual terms, though some like credit default swaps and securitization are used after origination to transfer existing credit risk.
Bonds are debt instruments that allow governments and corporations to borrow money from investors. Instead of taking loans from banks, they issue bonds where investors receive fixed interest payments until maturity, when the full amount is repaid. There are different types of bonds including government bonds, which are backed by the government and have lower risk, and corporate bonds, which are riskier but can offer higher returns. When choosing bonds, investors must consider factors like security, credit rating, risks involving interest rates and inflation.
The document discusses various types of bonds as investments, including their purposes, characteristics, and suitability for different investors. It covers corporate bonds, government bonds, municipal bonds, and factors to consider when deciding whether to buy or sell a bond such as its ratings, yield, and market value compared to current interest rates.
What are bonds. elements of bonds. FACE VALUE. bondholders. dividend rate. yield rate. coupon dates. maturity date.
Lesson by grade 11 students. of k23 curriculum. first batch 2k16
The document discusses key concepts related to bond valuation including features of bonds like par value, coupon rate, maturity date, and yield to maturity. It also defines different types of bonds such as coupon bonds, discount bonds, callable bonds, and convertible bonds. Examples are provided to illustrate how to calculate current yield, capital gains yield, and yield to maturity for bonds using a financial calculator. The valuation of bonds is demonstrated using the present value of future cash flows approach.
This document discusses the valuation of long-term securities such as bonds, preferred stock, and common stock. It begins by distinguishing between different valuation concepts such as going-concern value, liquidation value, and intrinsic value. It then covers bond valuation in detail, discussing important terms, types of bonds including perpetual, coupon, zero-coupon and junk bonds, and how to handle semiannual compounding. Preferred stock is valued as a perpetuity. Common stock valuation models include the dividend valuation model and its adjustments, as well as assumptions about constant dividend growth and zero growth.
- Bond valuation involves discounting future cash flows from bonds like coupon payments and principal repayment to calculate the present value, which is the bond price.
- Zero-coupon bonds pay the full face value at maturity with no interim coupon payments, while coupon bonds pay regular interest payments and repay the principal.
- Bond prices are inversely related to interest rates - they fall when rates rise and vice versa. Longer-term bonds are more sensitive to interest rate changes.
This document discusses bonds and debentures. It defines bonds as a debt investment where an investor loans money to an entity for a fixed period at a fixed interest rate. Debentures are defined as unsecured debt instruments backed by the creditworthiness of the issuer. The key differences between bonds and debentures are that bonds are more secure since they are collateralized, while debentures carry higher interest rates due to being unsecured. The document also provides an example calculation of valuing a bond.
Mary has $20,000 in savings that she plans to invest. She needs $10,000 in one year for a car and $1,000 in two months for a holiday. She wants to save the rest for a house in 5-7 years. For short-term savings under two years, cash investments like savings accounts and cash management trusts are recommended as they are low risk with stable returns but inflation can reduce savings value. Fixed interest investments like term deposits provide higher returns but prices can fall if interest rates rise, potentially losing money. Government bonds have very low default risk but prices vary. Riskier investments should be avoided for long-term savings needed in 5-7 years.
This document provides an overview of the Home Equity Conversion Mortgage (HECM) as a cash flow management tool for senior homeowners. Key points include: a HECM is a federally-insured reverse mortgage that provides tax-free funds to homeowners 62+ through a line of credit, lump sum payment, monthly payments or a combination; funds can be used for any purpose and are not repaid until the home is sold; and recent changes have expanded access and protections, making HECMs a viable option for enhancing portfolio longevity in retirement rather than a last resort. Case studies demonstrate how HECMs can be structured for different needs like healthcare costs or downsizing.
Chapter 06 Valuation & Characteristics Of BondsAlamgir Alwani
The document discusses various topics related to bond valuation and characteristics, including:
- Bonds are valued based on the present value of their expected future cash flows.
- Bond prices fluctuate as interest rates change, with bond prices falling when rates rise.
- Other factors like call provisions, convertibility, credit ratings, and bond indentures also impact bond valuation and risk.
- Diluted earnings per share calculations must account for potential share dilution from convertible bonds.
Bonds and debentures are both long-term borrowing instruments where the borrower promises to pay interest on specific dates and the principal upon maturity. Debentures are unsecured while bonds can be secured by assets of the issuing company. Bonds provide regular income payments to investors and do not provide ownership in the issuing company. The value, yield, and returns of bonds are determined by factors such as the par value, coupon rate, maturity date, call provisions, and credit quality of the issuer.
The document provides an overview and definitions of bonds, interest rates, and equities. It defines a bond as a type of security used to raise capital with characteristics including a principal amount to be repaid at maturity, coupon payments, and an issuer and holder. Bonds are issued by governments, corporations, and other entities and held by pension funds and other investors. Interest rates and stock markets are also discussed at a high level.
This document provides an overview of bond valuation and interest rate sensitivity. It begins with an introduction to bonds and bond markets, including different types of bonds such as zero-coupon bonds and coupon bonds. It then discusses how to value zero-coupon bonds and coupon bonds using present value calculations. The document also examines how bond prices are inversely related to interest rates and how duration can be used to measure a bond's interest rate sensitivity.
BONDS GUIDE
Considered by many to be a vital element in any financial plan, bonds can be used to help you grow your wealth.
In this bonds guide we take a look at financial bonds: explaining how bonds work; the vital factors you should consider before making bonds investments; and strategies to consider when making bond investments.
Corporate bonds are debt instruments that companies issue to raise money for growth and expansion. Investors purchase these bonds and the company repays the principal plus interest over a fixed period of time. The process involves companies establishing themselves with brokerage firms to issue bonds that investors can purchase in denominations of $1000 or more through their brokerage. Investors receive annual interest payments until the bond's maturity date when the full principal is repaid, providing a stable investment. However, corporate bonds carry more risk than government bonds, with unsecured bonds having potential default risk.
The mortgage process involves several key steps:
1. Getting pre-approved for a mortgage to determine how much you can borrow and protect the interest rate for up to 120 days.
2. Shopping for a home with your pre-approved mortgage amount.
3. Submitting a mortgage application including documents like pay stubs, bank statements, and information about the property.
4. Having conditions like an appraisal met before finalizing the mortgage.
5. Signing legal documents to transfer title and finalize the mortgage.
The document discusses refinancing and reasons for refinancing a loan. Refinancing means taking out a new loan to replace an existing loan, often at a lower interest rate. Reasons for refinancing include lowering interest rates to reduce monthly payments, switching to a fixed rate to gain certainty around payments, paying off the loan sooner by reducing the term, and consolidating multiple mortgages into one payment. Refinancing can also provide cash out against the equity in a property that can be used for home improvements, education expenses, or other major purchases.
The document describes a collateral loan program that provides loans of $10 million or more, backed by collateral from a third party rather than the client. Key aspects include:
- Loans can be used for any project type worldwide and are paid back over 10 years with no prepayment penalty. Interest rates are variable between 0-3% plus Libor (around 6.5% on average).
- The program offers a 1-3 year deferral period where the borrower does not have to pay interest or make minimum payments, even if the project could repay the loan earlier.
- It involves multiple participants including the client, collateral provider, depositor who provides the collateral, purchaser who buys the interest in the
The document summarizes the Main Street Lending Program (MSLP) established by the Federal Reserve to provide support to small and medium-sized businesses during the COVID-19 pandemic. It describes the three types of loans offered through the program - the New Loan Facility, Priority Loan Facility, and Expanded Loan Facility. It provides details on loan sizes, terms, fees, and the role of the Federal Reserve and eligible lenders. It also outlines restrictions on borrower compensation, stock repurchases, dividends, debt repayment, and use of funds to qualify for the program.
Bonds are debt instruments that allow governments and corporations to borrow money from investors. Instead of taking loans from banks, they issue bonds where investors receive fixed interest payments until maturity, when the full amount is repaid. There are different types of bonds including government bonds, which are backed by the government and have lower risk, and corporate bonds, which are riskier but can offer higher returns. When choosing bonds, investors must consider factors like security, credit rating, risks involving interest rates and inflation.
The document discusses various types of bonds as investments, including their purposes, characteristics, and suitability for different investors. It covers corporate bonds, government bonds, municipal bonds, and factors to consider when deciding whether to buy or sell a bond such as its ratings, yield, and market value compared to current interest rates.
What are bonds. elements of bonds. FACE VALUE. bondholders. dividend rate. yield rate. coupon dates. maturity date.
Lesson by grade 11 students. of k23 curriculum. first batch 2k16
The document discusses key concepts related to bond valuation including features of bonds like par value, coupon rate, maturity date, and yield to maturity. It also defines different types of bonds such as coupon bonds, discount bonds, callable bonds, and convertible bonds. Examples are provided to illustrate how to calculate current yield, capital gains yield, and yield to maturity for bonds using a financial calculator. The valuation of bonds is demonstrated using the present value of future cash flows approach.
This document discusses the valuation of long-term securities such as bonds, preferred stock, and common stock. It begins by distinguishing between different valuation concepts such as going-concern value, liquidation value, and intrinsic value. It then covers bond valuation in detail, discussing important terms, types of bonds including perpetual, coupon, zero-coupon and junk bonds, and how to handle semiannual compounding. Preferred stock is valued as a perpetuity. Common stock valuation models include the dividend valuation model and its adjustments, as well as assumptions about constant dividend growth and zero growth.
- Bond valuation involves discounting future cash flows from bonds like coupon payments and principal repayment to calculate the present value, which is the bond price.
- Zero-coupon bonds pay the full face value at maturity with no interim coupon payments, while coupon bonds pay regular interest payments and repay the principal.
- Bond prices are inversely related to interest rates - they fall when rates rise and vice versa. Longer-term bonds are more sensitive to interest rate changes.
This document discusses bonds and debentures. It defines bonds as a debt investment where an investor loans money to an entity for a fixed period at a fixed interest rate. Debentures are defined as unsecured debt instruments backed by the creditworthiness of the issuer. The key differences between bonds and debentures are that bonds are more secure since they are collateralized, while debentures carry higher interest rates due to being unsecured. The document also provides an example calculation of valuing a bond.
Mary has $20,000 in savings that she plans to invest. She needs $10,000 in one year for a car and $1,000 in two months for a holiday. She wants to save the rest for a house in 5-7 years. For short-term savings under two years, cash investments like savings accounts and cash management trusts are recommended as they are low risk with stable returns but inflation can reduce savings value. Fixed interest investments like term deposits provide higher returns but prices can fall if interest rates rise, potentially losing money. Government bonds have very low default risk but prices vary. Riskier investments should be avoided for long-term savings needed in 5-7 years.
This document provides an overview of the Home Equity Conversion Mortgage (HECM) as a cash flow management tool for senior homeowners. Key points include: a HECM is a federally-insured reverse mortgage that provides tax-free funds to homeowners 62+ through a line of credit, lump sum payment, monthly payments or a combination; funds can be used for any purpose and are not repaid until the home is sold; and recent changes have expanded access and protections, making HECMs a viable option for enhancing portfolio longevity in retirement rather than a last resort. Case studies demonstrate how HECMs can be structured for different needs like healthcare costs or downsizing.
Chapter 06 Valuation & Characteristics Of BondsAlamgir Alwani
The document discusses various topics related to bond valuation and characteristics, including:
- Bonds are valued based on the present value of their expected future cash flows.
- Bond prices fluctuate as interest rates change, with bond prices falling when rates rise.
- Other factors like call provisions, convertibility, credit ratings, and bond indentures also impact bond valuation and risk.
- Diluted earnings per share calculations must account for potential share dilution from convertible bonds.
Bonds and debentures are both long-term borrowing instruments where the borrower promises to pay interest on specific dates and the principal upon maturity. Debentures are unsecured while bonds can be secured by assets of the issuing company. Bonds provide regular income payments to investors and do not provide ownership in the issuing company. The value, yield, and returns of bonds are determined by factors such as the par value, coupon rate, maturity date, call provisions, and credit quality of the issuer.
The document provides an overview and definitions of bonds, interest rates, and equities. It defines a bond as a type of security used to raise capital with characteristics including a principal amount to be repaid at maturity, coupon payments, and an issuer and holder. Bonds are issued by governments, corporations, and other entities and held by pension funds and other investors. Interest rates and stock markets are also discussed at a high level.
This document provides an overview of bond valuation and interest rate sensitivity. It begins with an introduction to bonds and bond markets, including different types of bonds such as zero-coupon bonds and coupon bonds. It then discusses how to value zero-coupon bonds and coupon bonds using present value calculations. The document also examines how bond prices are inversely related to interest rates and how duration can be used to measure a bond's interest rate sensitivity.
BONDS GUIDE
Considered by many to be a vital element in any financial plan, bonds can be used to help you grow your wealth.
In this bonds guide we take a look at financial bonds: explaining how bonds work; the vital factors you should consider before making bonds investments; and strategies to consider when making bond investments.
Corporate bonds are debt instruments that companies issue to raise money for growth and expansion. Investors purchase these bonds and the company repays the principal plus interest over a fixed period of time. The process involves companies establishing themselves with brokerage firms to issue bonds that investors can purchase in denominations of $1000 or more through their brokerage. Investors receive annual interest payments until the bond's maturity date when the full principal is repaid, providing a stable investment. However, corporate bonds carry more risk than government bonds, with unsecured bonds having potential default risk.
The mortgage process involves several key steps:
1. Getting pre-approved for a mortgage to determine how much you can borrow and protect the interest rate for up to 120 days.
2. Shopping for a home with your pre-approved mortgage amount.
3. Submitting a mortgage application including documents like pay stubs, bank statements, and information about the property.
4. Having conditions like an appraisal met before finalizing the mortgage.
5. Signing legal documents to transfer title and finalize the mortgage.
The document discusses refinancing and reasons for refinancing a loan. Refinancing means taking out a new loan to replace an existing loan, often at a lower interest rate. Reasons for refinancing include lowering interest rates to reduce monthly payments, switching to a fixed rate to gain certainty around payments, paying off the loan sooner by reducing the term, and consolidating multiple mortgages into one payment. Refinancing can also provide cash out against the equity in a property that can be used for home improvements, education expenses, or other major purchases.
The document describes a collateral loan program that provides loans of $10 million or more, backed by collateral from a third party rather than the client. Key aspects include:
- Loans can be used for any project type worldwide and are paid back over 10 years with no prepayment penalty. Interest rates are variable between 0-3% plus Libor (around 6.5% on average).
- The program offers a 1-3 year deferral period where the borrower does not have to pay interest or make minimum payments, even if the project could repay the loan earlier.
- It involves multiple participants including the client, collateral provider, depositor who provides the collateral, purchaser who buys the interest in the
The document summarizes the Main Street Lending Program (MSLP) established by the Federal Reserve to provide support to small and medium-sized businesses during the COVID-19 pandemic. It describes the three types of loans offered through the program - the New Loan Facility, Priority Loan Facility, and Expanded Loan Facility. It provides details on loan sizes, terms, fees, and the role of the Federal Reserve and eligible lenders. It also outlines restrictions on borrower compensation, stock repurchases, dividends, debt repayment, and use of funds to qualify for the program.
This document discusses various sources and methods of short-term financing for companies. It describes spontaneous financing sources like trade credits and accruals that arise from normal business operations without additional negotiation. Trade credits can come from open account arrangements, notes payables, or trade acceptances between suppliers and buyers. The document also examines negotiated financing options like commercial paper, bank loans, asset-backed loans, and factoring of accounts receivable. It analyzes factors for companies to consider like costs, availability, timing, flexibility and encumbrance of assets when determining the best mix of short-term financing sources.
- A term loan is a credit product where a lender provides a principal amount to a borrower who is expected to repay the principal plus fixed interest payments on scheduled dates. In the event of default, the lender can pursue debt collection to recover outstanding amounts. The expected default amount (EAD) is the principal plus accrued interest, and the loss given default (LGD) is high at around 90% since legal recourse is limited.
- A credit card allows revolving credit up to a pre-set limit, where consumers make purchases that are accumulated in a monthly statement balance. Consumers must pay the balance in full or incur interest charges, and outstanding balances cannot exceed the credit limit.
The document discusses secondary markets for structured cash flows, such as pensions, which allow individuals to sell future income streams for a lump sum payment. It provides details on Future Income Payments, LLC, a company that facilitates these transactions, including their process for underwriting sellers, mitigating risks through reserve accounts, and replacing cash flows if needed. Examples of purchase prices, terms, and monthly payments are given to illustrate potential returns from structured cash flows compared to other fixed income options like annuities.
The document discusses a project funding program that offers non-recourse loans to qualified projects. It provides loans secured by bank guarantees, with minimum collateral of $10M and minimum funding of $4M. The loans appear to be recourse initially but become non-recourse after the client pays fees for the bank collateral, including a 35% purchase price and 5% arrangement fee. The client submits project details for review and if approved, follows steps to secure the collateral and receive loan funding in their account.
The document outlines the general parameters for obtaining project funding, including:
1) The process takes 5-7 days from letter of interest to funding agreement, with a standby letter of credit (SBLC) provided upfront equal to 12-15% of the loan amount.
2) First loan disbursement occurs around 2 weeks after receiving the SBLC, then monthly, with interest starting after the draw period at 6-9% over 10-20 years.
3) The lender will fund up to 100% of costs and take up to a 20% equity stake in exchanges for bearing expenses.
This document discusses different types of loans and mortgages from the perspective of customers and banks. It defines loans and differentiates between secured and unsecured loans. It explains how interest rates affect monthly payments and payoff periods. It discusses reasons why companies may need loans and describes the amortization of loans. It also outlines the process of opening bank credit, factors that influence credit approval, and types of credit commitments banks provide including guarantees. The document further explains mortgage contracts, different types of leasing agreements including operating and financial leases, and real estate lease-back arrangements.
This document lists long term funding sources including debentures and term loans. It provides details on 10 individuals who have been provided debentures. It then provides an in depth explanation of debentures including their purpose, features, types, redemption options, advantages and disadvantages. Term loans are also discussed including their key features, specialized institutions that provide them, procedures for application, and advantages and disadvantages.
This document discusses factoring, which is a financial transaction where a business sells its accounts receivable to a third party called a factor in exchange for immediate cash. There are several types of factoring described, including domestic, international, recourse, non-recourse, maturity, and invoice factoring. The key differences between factoring and a bank loan are also outlined. A case study is then provided showing how a company used export factoring and purchase order financing to fulfill several contracts requiring upfront capital.
ch21 - Econ 442 - financial markets Par 1 of 2 (1).pdfjgordon21
The chapter discusses bond pricing and interest rate theory. It covers different types of bonds like government, corporate, municipal, and mortgage bonds. It also defines various interest rates used in bond valuation like spot rates, yield to maturity, current yield, and forward rates. Spot rates refer to the yield on zero-coupon bonds for different time periods. Forward rates represent the expected future interest rates for new loans committed today. The timing and definitions of cash flows and interest rates are important for accurately pricing and comparing bonds.
Public deposits are an important source of financing for companies' medium and long-term requirements. Public deposits refer to money received from the general public, employees, and shareholders through deposits or loans, excluding money from shares and debentures. Companies offer interest rates of 8-11% for deposits ranging from 1-3 years. Companies advertise deposit rates and repayment terms in newspapers. Regulations require a minimum 6 month maturity, and limit deposits to 25% of reserves and capital. Public deposits do not require security but have shorter maturity periods than other instruments and limited funds.
Capstone Global Finance Project Funding Program - facts, information & processchiron34
Under the innovative Capstone Global Finance Project Funding Program, Clients' projects are initially processed through a 'pre-funding approval program' to ensure that apart from compliance with cash liquidity or collateralisation requirements specified by our funding partners, the project is otherwise qualified for funding. Capstone then takes appropriate action to recruit a suitable joint venture partner for our client, who will provide the cash liquidity reserves as the overall project's demonstration as having 'skin in the game'.
The pre-approved project will then be processed for a relatively quick funding approval, thus permitting the Client to get on with the job with a minimum of delay. Projects accepted into the Capstone Global Finance Project Funding Program have a capital requirement between €10 Million euros ($USD 15 million dollars) and €150 Million euros ($USD 200 million dollars).
The document summarizes a project funding program that provides funding options using enhanced collateral like bank guarantees. It details:
- Minimum/maximum funding amounts of €10-200 million with collateral valued to total project cost and 5-year maximum tenure.
- Application and funding timeline of 15-90 days and required €350,000 liquidity for costs.
- 8% annual collateral rental and up to 6% interest plus 7-8% closing costs.
- Assistance program for clients lacking liquidity through joint venture partners.
- Example of an €80 million solar project funded in 8-10 weeks with 5-6% interest and 100% equity retained.
This document outlines commercial lending programs from Sterling Commercial Capital for construction, multifamily, and land development projects. It provides details on loan terms, requirements, and fees for domestic and international loans ranging from $5 million minimum to no maximum. Key details include interest rates of 8-18%, points of 4-12%, loan-to-value and loan-to-cost ratios of 60-100%, and maturities of 1-5 years. Guarantors, pre-leasing, and proof of funds may be required depending on the specific program.
Ability to Repay/Qualified Mortgage Synopsis
By Deene Spurrier
Internal controls are important to organizations, their shareholders, employees and coworkers. One type of internal control is procedures.
This document provides information about term loans. It defines term loans as monetary loans that are repaid in regular installments over a set period of time. It discusses the purposes of term loans including capital expenditure, new industrial undertakings, and acquisition of assets. It also outlines the procedures for term loans including application submission and processing, project appraisal, sanction letter, loan agreement execution, and disbursement. Different types of term loans like short, intermediate, and long term are described. Key features of term loans like interest payment schedules, security requirements, and covenants are summarized. Finally, an example repayment schedule for a term loan is shown.
This document describes the leasing of bank guarantees and standby letters of credit. It states that while these financial instruments cannot physically be leased, it is possible to effectively import them through collateral transfer agreements where a provider pledges assets to issue the guarantee. The document provides details on the transaction process, fees, and documentation required. It clarifies that these transactions involve collateral transfer rather than an actual lease, and warns against purchases of guarantees which are not possible.
Capstone global finance project funding program facts, information & processcjankowski
The document describes Capstone Global Finance's project funding program. It provides funding from €10-150 million for 1-5 years secured by a bank guarantee as collateral. Applicants need €350,000 in cash and a viable business plan. The process takes 8-10 weeks and includes fees of up to 8% annually for collateral rental and 6% interest. The program assists applicants in obtaining joint venture partners if they lack funds and provides 100% funding for renewable energy projects.
Similar to Structured Compensating Collateral Securitization 1.3a (20)
2. Benficial Interest Transferred Into Trust Collateral Instruments & Guarantees Secured – GIC Formed 10-Yr Term Certain Re-Insurance Guarantee Added GIC TRUST Secures Required Portfolio of Benficial Interest in Death Benefit of Life Ins. Policies of People 70+ Years Old
3. The Collateral Investor’s CD’s Allow for a Compensating Balance for this Financing Structure Collateral is Registered in UCC Filings Against Borrower and the GIC $32.8M Corporate Loan Compensating Balance to GIC Lending Package Arranged CDARS = Certificate of Deposit Account Registry Service - allows $50 million invested in CDs at one bank - all FDIC insured Lending Bank $32.8M Cash Deposit Collateral Investor or QIB GIC $32.8M Face Value $32.8M CDARS 10 Yr Loan to Borrower Interest Cost is tied to CDARS Spread Loan Payments Beneficial Interest $17.1M Collateralized Guarantee (GIC) & Fees $10M Net Cash Infusion to Borrower Operating Account $5.7M 2-Yrs Pre-Paid Int. Reserve Account Optional Equity Kicker Incentives
4. How Guaranteed Insurance Contracts (GIC,s) Are Applied GIC Lending Bank or Syndication of Banks Re-Insurance Guarantee to Pay 100% of Life Insurance Benefits in 10-Year Term Life Insurance Policies Which Transfer Beneficiary Interest to GIC GIC Transfers Beneficary Interest to Bank for Loan Collateral
5. Insured Dies 1 Yr Insured Dies 18 Months Declining Loan Balance as GIC Policies Mature At End of Term Re-insurance Pays all Policies that have not Matured – 100% Guaranteed As Insured Die Policys Pay to Beneficiary Lending Bank or Syndication of Banks GIC $500,000 $1,000,000 $5,000,000 $2,500,000 Beginning Balance $ 32,800,000 Declining Loan Balance -$5,000,000 $ 27,800,000 -$2,500,000 $ 25,300,000
6. Lending Bank or Syndication of Banks Venture Project Borrower Maintains GIC Premium Payments or comes from early Maturity of GIC GIC 50% of Loan = 110% of Project Cost Pre-Pays 2-Yrs Interest Only Pays Yrs 3-10 P&I on Net Loan from Cash Flow 50% of Loan = 100% of Collateral Cost Collateral Value = 100% of Loan Pays 100% Loan P&I Remaining Balance
7. $10M Net Working Capital Example Example indicates equal maturity of GIC years 3 – 10 (assumed scenario) and no maturity until end of term (worst-case scenario), both with P&I payments on the Net Loan per annum years 3 – 10 (Yr 10 also pays off any remaining balance of P&I). Re-insured GIC returns 100% Principal balance plus ROI by end of Term, which fulfils 100% of the Lender/Bank CD yield to Compen-sating Balance Depositor, and covers an assumed Bank spread in Interest Rate to Borrower (see below for additional coverage). Note: The Loan examples used are Principal & Interest on the Net Loan with Yr 10 also making up for Yrs 1 & 2 Interest Only. It can also be structured on other terms and an extended Term beyond the Term of the GIC, per the Bank preferences.
8. Above assumes additional (Minimum) $1M per annum of Cash Flow (after P&I payments have been made, which are entered above) beginning in year 3 & flat ($1M) each year through 10th end of term. Any shortfall in Interest Rate spread from Loan to Borrower can be paid (monthly or per annum) from Borrower business or enterprise EBIT. Note: In both examples, the GIC Premium Payments have been expensed years 3 – 10 in the stated cash flows. Note: This is the same example as the prior slide, however showing additional Cash Flows from the business enterprise beginning in the 3 rd year.
9. Lending Bank ► Receives Cash Deposit from 3rd party Investor or QIB (arranged by Borrower), purchasing a $32.8M 10Yr CDARS from the Lending Bank. ► Bank then loans a compensating amount ($32.8M) to Borrower for a 10-Year Term - receives 2-Yrs pre-paid Interest, and fully compensating collateral of Re-insured Guaranteed Insurance Contracts (GIC) with a face maturity value of $32.8M A-rated and term 100% guaranteed by re-insurance. Lending Bank is the Beneficiary of the GIC. ► Bank receives full P&I payments from Borrower on the Net Loan ($13,934,427) per annum years 3 – 10. Yrs 1 & 2 are paid on the back end Yr 10. ► Bank also takes a 1st (or subordinate to any existing lender secured) position on the Assets Borrower acquires with the Net Capital. ► Borrower also agrees to use the Lending Bank as the depository for all banking trans-actions for the Borrower business. ► The GIC matures at various stages during the Term to the benefit of Bank (beneficiary of GIC) and pays down the Principal in tranches as GIC has maturity events, and any remaining balance is 100% guaranteed and paid at the end of term by the A-rated re-insurance contract. This provides 100% guaranteed return of Principal and a certain however variable IRR.
10. Lending Bank (Cont.) ► Per the example, Bank receives an assumed 10.25% IRR and no worse than 6.36% IRR from the maturity of the GIC. This return is applied against the Borrower Loan Interest cost it ties to the CD. Any off-setting interest deficit is paid to the Bank by borrower from the business or enterprise Cash Flows. Principal is 100% guaranteed and paid from the maturity of the GIC, and also secured by the CD, and additionally secured by the assets acquired by Borrower. ► Lending Bank Will be Able to Demonstrate: ● Minimization of Credit & Reserve Exposure ● Quality Loans on its Books ● Growth of Customer Deposits ● Reduction in Probability of Problem Assets ● Exploits A Unique Market Position
11. Collateral Investor of QIB ► Invests $32.8M with the Lending Bank for the purchase of 10-Yr CD’s at prevailing CDARS rates – FDIC insured. ► CD’s are never at risk, as their is no connection between the CDARS and the Loan to Borrower. The transaction is solely for the purpose of creating a Compensating Balance.
12. Borrower ► Receives a 100% securitized Loan ► No payments for initial 24 Months – Interest payments are financed for this period ► Pays off Yrs 1 & 2 in Yr 10 as a lump sum from GIC and Cash flows ► If development project is able to pay off the principal of the Loan earlier than the 10-Yr Term, the beneficial interest in the GIC is transferred from the Lending Bank to the benefit of the Borrower. GIC can be sold and cashed out early, or flipped to the next transaction of Borrower as the structured collateral instrument (which now has a shorter maturity guarantee, i.e., if in 5-years, the Principal return can be 100% guaranteed in 5-Yrs).
13. Venture Funding Advisors ► In cooperation with Borrower, finds Collateral Investor and assists in negotiating favorable terms and conditions of the transaction as described above. ► In cooperation with Borrower, secures Lending Bank for transaction on the basis of the structure described herein. ► Provides GIC Trust document ► Resources Life Settlement collaterals to the criteria of Re-insurer (see further information on this below). 1 to 1 up to 1 to 1.2+ coverage. ► Resources Re-insurance wrap for a 10-Year fixed date certain – 100% guaranteed pay-off of the balance of Principal Loan and any remaining Interest. ► Third-Party Administrator of the GIC and annual maintenance oversight.
14. www.VFundAdvisors.com Columbus, OH Irvine, CA Miami, FL Jim Nash (949) 485-5252 Structured Compensating Collateral Securitization Finance Strategy