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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 issuer (usually a financial institution) becomes insolvent.
Substitutions: to deal with requests for collateral substitutions both ways. For example, one party would like to substitute one form of collateral for another. Processing: to pay over coupons on securities promptly after receipt to collateral providers, to pay over interest on cash collateral and to monitor its receipt [5] [13]
The yield and weighted average life of the bonds or equity notes being issued is then calculated based on the modeling assumptions provided by the underwriter. On each payment date, an accounting firm may work with the trustee to verify the distributions that are scheduled to be made to the noteholders.
The covered bonds will also be secured by a pool of residential mortgage loans originated by MBL and eligible substitution assets, collectively referred to as the cover pool.Issuer: Macquarie Bank ...
The Pfandbrief (plural: Pfandbriefe), 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.
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt ...
Using the same example as above, assume the first investment opportunity is a government bond that will pay interest of 5% per year and the principal and interest payments are guaranteed by the government. Alternatively, the second investment opportunity is a bond issued by small company and that bond also pays annual interest of 5%.
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