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A Notes
In structured finance, a tranche () is one of a number of related securities offered as part of the same transaction. In the financial sense of the word, each bond is a different slice of the deal's risk. Transaction documentation (see indenture) usually defines the tranches as different "classes" of notes, each identified by letter (e.g., the Class A, Class B, Class C securities) with different bond credit ratings. Etymology The word ''tranche'' means ''a division or portion of a pool or whole'' and is derived from the French for 'slice', 'section', 'series', or 'portion', and is also a cognate of the English 'trench' ('ditch'). The term ''tranche'' is used in fields of finance other than structured finance (such as in straight lending, where ''multi-tranche loans'' are commonplace), but the term's use in structured finance may be singled out as particularly important. Use of "tranche" as a verb is limited almost exclusively to this field. Process All the tranches to ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Structured Finance
Structured finance is a sector of finance — specifically financial law — that manages Leverage (finance), leverage and Financial risk, risk. Strategies may involve legal and corporate restructuring, off balance sheet accounting, or the use of financial instruments. Securitization provides $15.6 trillion in financing and funded more than 50% of U.S. household debt last year. Through securitization and structured finance, more families, individuals, and businesses have access to essential credit, seamlessly and at a lower price. With more than 370 member institutions, the Structured Finance Association (SFA) is the leading trade association for the structured finance industry. SFA’s purpose is to help its members and public policymakers grow credit availability and the real economy in a responsible manner. ISDA conducted market surveys of its Primary Membership to provide a summary of the notional amount outstanding of interest rate, credit, and equity derivatives, until 20 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Risk Averse
In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even if the average outcome of the latter is equal to or higher in monetary value than the more certain outcome. Risk aversion explains the inclination to agree to a situation with a lower average payoff that is more predictable rather than another situation with a less predictable payoff that is higher on average. For example, a risk-averse investor might choose to put their money into a bank account with a low but guaranteed interest rate, rather than into a stock that may have high expected returns, but also involves a chance of losing value. Example A person is given the choice between two scenarios: one with a guaranteed payoff, and one with a risky payoff with same average value. In the former scenario, the person receives $50. In the uncertain scenario, a coin is flipped to decide whether the person receives $100 or nothing. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Maturity (finance)
In finance, maturity or maturity date is the date on which the final payment is due on a loan or other financial instrument, such as a Bond (finance), bond or term deposit, at which point the Bond (finance)#Principal, principal (and all remaining interest) is due to be paid. Most instruments have a ''fixed maturity date'' which is a specific date on which the instrument matures. Such instruments include fixed interest and variable rate loans or debt instruments, however called, and other forms of security such as redeemable preference shares, provided their terms of issue specify a maturity date. It is similar in meaning to "redemption date". Some instruments have ''no fixed maturity date'' which continue indefinitely (unless repayment is agreed between the borrower and the lenders at some point) and may be known as "perpetual stocks". Some instruments have a range of possible maturity dates, and such stocks can usually be repaid at any time within that range, as chosen by the bor ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Structured Products
A structured product, also known as a market-linked investment, is a pre-packaged structured finance investment strategy based on a single Security (finance), security, a basket of securities, Option (finance), options, Index (economics), indices, commodities, debt issuance or foreign Currency, currencies, and to a lesser extent, Derivative (finance), derivatives. Structured products are not homogeneous — there are numerous varieties of derivatives and underlying assets — but they can be classified under the aside categories. Typically, a trading desk, desk will employ a specialized "structurer" to design and manage its structured-product offering. Formal definitions U.S. Securities and Exchange Commission (SEC) Rule 434 (regarding certain prospectus deliveries) defines structured securities as "securities whose cash flow characteristics depend upon one or more indices or that have Embedded option, embedded forwards or options or securities where an investor's investment return ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Committee On The Global Financial System
The Committee on the Global Financial System (CGFS) is an international body hosted by the Bank for International Settlements (BIS) in Basel. Overview The Euro-Currency Standing Committee (ECSC) was established by a decision of the BIS Governors at their meeting of April 1971. It adopted its current name in February 1999, as the word euro had taken a new meaning as the European single currency. The CGFS reports to the BIS Global Economy Meeting. It helps member central banks to assess stability risks in financial markets on a global scale, and coordinates the ongoing development of the BIS' international banking and financial market statistics. It has been described by economist Charles Goodhart as the "premier macro-economic forum for the discussion of international tensions / imbalances". As of 2024, the CGFS had 28 members: Central Bank of Argentina, Reserve Bank of Australia, National Bank of Belgium, Central Bank of Brazil, Bank of Canada, People's Bank of China, European ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Government Bonds
A government bond or sovereign bond is a form of bond issued by a government to support public spending. It generally includes a commitment to pay periodic interest, called coupon payments'','' and to repay the face value on the maturity date. For example, a bondholder invests $20,000, called face value or principal, into a 10-year government bond with a 10% annual coupon; the government would pay the bondholder 10% interest ($2000 in this case) each year and repay the $20,000 original face value at the date of maturity (i.e. after 10 years). Government bonds can be denominated in a foreign currency or the government's domestic currency. Countries with less stable economies tend to denominate their bonds in the currency of a country with a more stable economy (i.e. a hard currency). All government bonds carry default risk; that is, the possibility that the government will be unable to pay bondholders. Bonds from countries with less stable economies are usually considered t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotland, Wales and Northern Ireland. The UK includes the island of Great Britain, the north-eastern part of the island of Ireland, and most of List of islands of the United Kingdom, the smaller islands within the British Isles, covering . Northern Ireland shares Republic of Ireland–United Kingdom border, a land border with the Republic of Ireland; otherwise, the UK is surrounded by the Atlantic Ocean, the North Sea, the English Channel, the Celtic Sea and the Irish Sea. It maintains sovereignty over the British Overseas Territories, which are located across various oceans and seas globally. The UK had an estimated population of over 68.2 million people in 2023. The capital and largest city of both England and the UK is London. The cities o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Gilts
Gilt-edged securities, also referred to as gilts, are bonds issued by the UK Government. The term is of British origin, and referred to the debt securities issued by the Bank of England on behalf of His Majesty's Treasury, whose paper certificates had a gilt (or gilded) edge. In 2002, the data collected by the British Office for National Statistics revealed that at that time about two-thirds of all UK gilts were held by insurance companies and pension funds. Since 2009 large quantities of gilts have been created and repurchased by the Bank of England under its policy of quantitative easing, and in recent years overseas investors have also been attracted to gilts by their "safe haven" status. Nomenclature In his 2019 book about the gilt market from 1928 to 1972, William A. Allen described gilt-edged securities as "long‐duration liabilities of the UK government" that were traded on the London Stock Exchange Today, the term "gilt-edged security" or simply "gilt" is used in ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Special Purpose Vehicle
A special-purpose entity (SPE), also called a special-purpose vehicle (SPV) or a financial vehicle corporation (FVC), is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives. SPEs are typically used by companies to isolate the firm from financial risk. A formal definition is "The Special Purpose Entity is a fenced organization having limited predefined purposes and a legal personality". Normally a company will transfer assets to the SPE for management or use the SPE to finance a large project thereby achieving a narrow set of goals without putting the entire firm at risk. SPEs are also commonly used in complex financings to separate different layers of equity infusion. Commonly created and registered in tax havens, SPEs allow tax avoidance strategies unavailable in the home district. Round-tripping is one such strategy. In addition, they are commonly used to own a single asset and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Ringfencing
In business and finance, ringfencing or ring-fencing occurs when a portion of a company's assets or profits are financially separated without necessarily being operated as a separate entity. This might be for: * regulatory reasons * creating asset protection schemes with respect to financing arrangements * segregating into separate income streams for taxation purposes * avoiding sanctions against a country. Asset protection In asset protection arrangements, ring-fencing can be employed through segregating specific assets and liabilities into separate companies of a corporate group. It can also be used as a method for mitigating liquidation risk or to improve a corporate credit rating. Separation for tax purposes In the United Kingdom, ring fence profits arise from income and gains from oil extraction activities or oil rights in the UK and UK continental shelf, and are subject to a higher rate of corporation tax. This petroleum fiscal regime can be seen in other countries as well. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
