See Chapters 27 and 44 of the Vernimmen
Senior debt is the debt held by creditors with either a security claim or a priority claim on repayment of the principal and the interest. Senior debt is also one of the types of debts used in LBO transactions.
See Chapters 27 and 44 of the Vernimmen
Subordinated debt is the debt repaid after the claims of the other creditors, in particular the senior creditors, have been settled. Subordinated debt is also called junior debt.
French equivalent: Titres subordonnés à durée indéterminée (TSDI)
See Chapter 7 of the Vernimmen
Perpetual subordinated loans and notes are never redeemable and thus continue to pay interest as long as the borrower remains solvent (see solvency). They have no duration because there is no contractual undertaking for repayment, which may take place when the issuer so wishes. If the issuer is liquidated, noteholders rank for repayment after other creditors (as they are subordinated debts) but before shareholders.
Perpetual subordinated loans and notes are also called perpetuals.
French equivalent: Titres Super Subordonnés (TSS)
2008年12月30日星期二
Essential Features of Covered Bonds
From: "The Pfandbrief 2008|2009 – Facts and Figures about Europe’s Covered Bond Benchmark", published by Association of German Pandbrief Banks, 13th edition, Berlin 2008
Covered bonds are characterised by the following common essential features that are achieved under special-law based frameworks or general-law based frameworks:
1. The bond is issued by – or bondholders otherwise have full recourse to – a credit institution which is subject to public supervision and regulation;
2. Bondholders have a claim against a cover pool of financial assets in priority to the unsecured creditors of the credit institutions;
3. The credit institution has the ongoing obligation to maintain sufficient assets in the cover pool to satisfy the claims of covered bondholders at all times;
4. The obligations of the credit institution in respect of the cover pool are supervised by public or other independent bodies.
Covered bonds are characterised by the following common essential features that are achieved under special-law based frameworks or general-law based frameworks:
1. The bond is issued by – or bondholders otherwise have full recourse to – a credit institution which is subject to public supervision and regulation;
2. Bondholders have a claim against a cover pool of financial assets in priority to the unsecured creditors of the credit institutions;
3. The credit institution has the ongoing obligation to maintain sufficient assets in the cover pool to satisfy the claims of covered bondholders at all times;
4. The obligations of the credit institution in respect of the cover pool are supervised by public or other independent bodies.
Pfandbrief
From: http://en.wikipedia.org
The Pfandbrief, a mostly triple-A rated German bank debenture, has become the blueprint of many covered bond models in Europe and beyond.
The Pfandbrief is collateralized by long-term assets such as property mortgages or public sector loans as stipulated in the Pfandbrief Act. Total volume outstanding in Pfandbriefe (the plural of Pfandbrief is Pfandbriefe in German) was EUR 889 billion in 2007. Pfandbrief bonds make up the third largest segment of the German bond market after public sectorbonds and unsecured bank debt.
Jumbo Pfandbrief
The Jumbo Pfandbrief, first brought to market in 1995, arose from a need to attract international investors to a market that had been largely of domestic interest. Instead of individual banks placing large-volume issues, the Jumbo Pfandbrief allows an issuing syndicate with the goal of marketing Jumbo Pfandbrief issues and of subsequently ensuring market making. A Jumbo Pfandbrief must have a minimum issuance volume of EUR 1 billion. The average issue size of a Jumbo Pfandbrief is about EUR 1.5 billion. A minimum of five market makers is required. Jumbo Pfandbriefe must be listed on the German stock exchange. [5] Total Jumbo covered bonds first-time sales amounted to EUR 161.3 billion in 2007. In 2007, the four biggest jumbo covered bond-issuing countries were France (24.7%), Spain (22.3%), Germany (20%), and the UK (10.7%).
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From: DR. LOUIS HAGEN | "The Pfandbrief 2008|2009 – Facts and Figures about Europe’s Covered Bond Benchmark", published by Association of German Pandbrief Banks, 13th edition, Berlin 2008
Pfandbrief are covered, interest-bearing bonds. They are issued by credit institutions with a license to engage in Pfandbrief business (Pfandbrief banks) and placed on the capital market. These credit institutions use them to fund certain loans that are secured by real estate liens, ship mortgages or claims against public-sector bodies. Depending on the type of collateralization, these bonds are referred to as Mortgage Pfandbriefe, Ship Pfandbriefe or Public Pfandbriefe. Most Pfandbriefe are issued in the form of bearer bonds, registered bonds also play an important role.
Links
Association of Germain Pfandbrief Banks: www.pfandbrief.org
The Pfandbrief, a mostly triple-A rated German bank debenture, has become the blueprint of many covered bond models in Europe and beyond.
The Pfandbrief is collateralized by long-term assets such as property mortgages or public sector loans as stipulated in the Pfandbrief Act. Total volume outstanding in Pfandbriefe (the plural of Pfandbrief is Pfandbriefe in German) was EUR 889 billion in 2007. Pfandbrief bonds make up the third largest segment of the German bond market after public sectorbonds and unsecured bank debt.
Jumbo Pfandbrief
The Jumbo Pfandbrief, first brought to market in 1995, arose from a need to attract international investors to a market that had been largely of domestic interest. Instead of individual banks placing large-volume issues, the Jumbo Pfandbrief allows an issuing syndicate with the goal of marketing Jumbo Pfandbrief issues and of subsequently ensuring market making. A Jumbo Pfandbrief must have a minimum issuance volume of EUR 1 billion. The average issue size of a Jumbo Pfandbrief is about EUR 1.5 billion. A minimum of five market makers is required. Jumbo Pfandbriefe must be listed on the German stock exchange. [5] Total Jumbo covered bonds first-time sales amounted to EUR 161.3 billion in 2007. In 2007, the four biggest jumbo covered bond-issuing countries were France (24.7%), Spain (22.3%), Germany (20%), and the UK (10.7%).
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From: DR. LOUIS HAGEN | "The Pfandbrief 2008|2009 – Facts and Figures about Europe’s Covered Bond Benchmark", published by Association of German Pandbrief Banks, 13th edition, Berlin 2008
Pfandbrief are covered, interest-bearing bonds. They are issued by credit institutions with a license to engage in Pfandbrief business (Pfandbrief banks) and placed on the capital market. These credit institutions use them to fund certain loans that are secured by real estate liens, ship mortgages or claims against public-sector bodies. Depending on the type of collateralization, these bonds are referred to as Mortgage Pfandbriefe, Ship Pfandbriefe or Public Pfandbriefe. Most Pfandbriefe are issued in the form of bearer bonds, registered bonds also play an important role.
Links
Association of Germain Pfandbrief Banks: www.pfandbrief.org
Covered bond
From: http://en.wikipedia.org
Covered bonds are debt securities backed by cash flows from mortgages or public sector loans. They are similar in many ways to asset-backed securities created in securitization, but covered bond assets remain on the issuer’s consolidated balance sheet.
Essentially, a covered bond is a corporate bond with one important enhancement: recourse to a pool of assets that secures or "covers" the bond if the originator (usually a financial institution) becomes insolvent. This enhancement typically (although not always) results in the bonds' being assigned AAA credit ratings.
For the investor, one major advantage to a covered bond is that the debt and the underlying asset pool remain on the issuer's financials, and issuers must ensure that the pool consistently backs the covered bond. In the event of default, the investor has recourse to both the pool and the issuer.
Another advantage is that the interest is paid from an identifiable source of projected cash flow versus out of other financing operations. Because non-performing loans or prematurely paid debt must be replaced in the pool, success of the product for the issuer depends on the institution's ability to evaluate the assets in the pool and to rate and price the bond.
Covered bonds are debt securities backed by cash flows from mortgages or public sector loans. They are similar in many ways to asset-backed securities created in securitization, but covered bond assets remain on the issuer’s consolidated balance sheet.
Essentially, a covered bond is a corporate bond with one important enhancement: recourse to a pool of assets that secures or "covers" the bond if the originator (usually a financial institution) becomes insolvent. This enhancement typically (although not always) results in the bonds' being assigned AAA credit ratings.
For the investor, one major advantage to a covered bond is that the debt and the underlying asset pool remain on the issuer's financials, and issuers must ensure that the pool consistently backs the covered bond. In the event of default, the investor has recourse to both the pool and the issuer.
Another advantage is that the interest is paid from an identifiable source of projected cash flow versus out of other financing operations. Because non-performing loans or prematurely paid debt must be replaced in the pool, success of the product for the issuer depends on the institution's ability to evaluate the assets in the pool and to rate and price the bond.
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