Collateral to enhance a loan?
YES, we can. But only if your application qualifies!
There is much broker talk and circulation of broker to broker information over leased instruments and transaction which never have a chance to materialize because of insufficient professional knowledge of the financial markets, rules and regulations.
“In case the applicant is taking out a loan involving enhancement Loan Collateral, Priority Collateral must always be applicant’s own existing assents. It is applicants responsibility to make sufficient own assents available in case of application for the instrument.
The advantage of this type of transaction during the terms of Enhancement Loan collateral instruments is that, the assets are administered solely by the applicant himself to back up any and all commitments whenever arising. This obviously can provide substantial leveraging effects.”
Facts and information
1. Introduction
2. Risk
3. Definition
4. Major Players
5. Procedure, 1st step
6. Instrument Description
7. Application
8. Applicants Guideline
“We don’t expect you to TRUST us, but we kindly request you to be honest and willing to create TRUST and surely we could cooperate in a long term business relationship”.
1. Introduction
We want to introduce clients who are genuine, ready willing and able to this wonderful opportunity of Bank instruments assignments through our private financial sources.
This special program is designed and created by private investors currently providing Fresh cut Bank Guarantees, Standby Letter of Credits and Medium Term Notes issued directly from their nominated Prime Banks, which are specifically assigning or sold to the client as beneficiary. They are completely different from other providers in the known industry because they operate outside the stock market; all our investors are private entities and individuals cooperating together to create this unique programme. Most important advantage for the client is that, our conception is a block cash loan unlike leasing and selling an already made instrument from the money market industry (MMI).
There is NO broker chain in this conception, once application is made and accepted from our Providers and Bankers than principle will directly deal with the Provider.
They can deliver within short time and precision as set forth in the agreement and the client is at liberty to engage the assignment into trade programs as well as in signature project(s) and credit enhancement.
2. RISK
In a loan transaction, based on any sort of collateral, borrower obviously exposes the collateral to a risk. In case the borrower uses “Enhancement Loan Collateral” Instruments to get a loan from another Bank, and if he does not comply with terms of the loan, the lending bank would retain and cash in on security instruments pledged to secure the loan. This means that the security instruments are exposed to potential risks.
It is obviously not possible to provide any kind of (Valid) instruments to borrower without being secured.
3. Definition
Enhancement is a scenario whereby a company attempts to improve its dept or credit worthiness by improving its balanced sheet. This is done in order to increase creditability to obtain a loan against the company assets, or project assets. The loan should never be directly against the financial “enhancement loan collateral“. Priority collateral must always be applicants own existing assets, even though it could be, if mutually agreed. During the terms of instrument, these assets (Backing up) are administered solely by the applicant to back up all commitments whenever arising. It is the applicants responsibility to make own sufficient assets available when applying for enhancement instruments. Most used Formats of Enhancement Loan Collaterals are: Bank Guarantees; Standby Letter of Credit; Bank comfort letters and Certificate of deposit.
4. Major Players
Applicant provides PROOF OF FUNDS: There is a possibility to structure a Bank Guarantee or a Standby Letter of Credit actually backed by, or based on real assets or collateral which build the basis of the Bank Guarantee or Standby Letter of Credit that is being issued.
Receiving Bank: The receiving bank confirms the safe return of the instruments prior maturity, unencumbered. This only works, if the client has a good relationship with his Bank.
The instruments also contain “controlling features” which disenables the receiving bank to draw on the instrument at maturity. Obviously a controlling feature clearly limits the use of the instruments and represents a useful tool, only if the client has a good relationship with his Bank.
Besides the applicant, there is always a coordinating arranger, a funder, an issuing and a receiving bank involved to structure a productive solution. One will have to be aware of the risks and problems that are involved in such transactions (see above). It is vital to understand the roles of the banks and the funders that are involved to make things happen. Banks provide the rules and platform through which they will provide banking services. Funders have to comply with these rules in order to successfully instruct a bank to provide a relevant service.
The coordinating arranger engineers the overall Enhancement Loan Collateral transaction. But if there is no funder, there is no Bank Instrument. Generally no Bank in this world will issue an instrument by itself, or if it has not received sufficient security against the issue. An Enhancement Loan instrument is initiated by a funder who will provide such security and take the risk of issuing the Instrument. A funder will never engage in a transaction that could obviously involve misuse of an instrument and eventually attempts involving credit fraud.
Since the funder will be backing up the deal and in order for the issuing bank to“advise” the instrument, the beneficiary of the instrument and service has to be accepted in the first place.
So the applicant will have to be approved by the funder and his nominated bankers. There is no anonymous transaction in this business!!
One can not expect a professional structure of Bank instrument deal or a quote of final terms, until the applicant/client is fully identified and qualified and has proven capability to conduct such a transaction. This has also to be done by showing the availability of the arrangement fees. It is solely the applicant’s responsibility to make sure that the receiving Bank is ready to receive and accept (SWIFT to SWIFT) communication from the issuing bank.
5. Procedure, 1st Step
a. Informal application for service and full description of the transaction. Business Plan together with proof of the applicant’s financial capacity (Bank statement or Bank letter from the receiving Bank) to pay for the arrangements. The receiving bank must provide a confirmation letter that they are willing to issue MT103-23.The instrument price and the commission fee must be included on the confirmation letter.
b. After due diligence and acceptance of the client/applicant, the transaction is engineered and structured and an agreement is issued by the funder or the coordinating arranger.
c. Generally the client/applicant will be granted sufficient time to discuss the terms and conditions regarding the contract with his bank, his lawyer and financial adviser.
d. Once the final agreement is achieved, the terms and conditions regarding the official contracts, the client and his representative (if there is any involved) must arrange a meeting with the coordinating arranger in
6. Instrument Description (Guideline)
1. Bank Guarantee, Standby Letter of Credit
2. Minimum Face Value: 25Million Euros
3. Issuing Banks are our nominated Prime Banks
4. Age: One Year, One Day
5. Leasing Price:.....% of face Value by MT799, MT103-23
6. Commission is ...% for the associates
7. Delivery: MT760 SWIFT TO SWIFT
8. Payment by Wire Transfer
9. Hard Copy by Bonded Courier
Ps. the higher the face value and client’s financial capacity and a good rated receiving bank, the lower are the costs/fees and the easier are the process for all involved.
7. Application
Applicants are obliged to provide an informative description of the entire transaction, how the Enhancement Loan Collateral is being used, how the funder is or will be secured together with a proof of the financial capacity of the applicant/client. This capability has to be none related to the use of the instrument that will be provided. Only in that case, a professional solution can be structured.
This is a guideline and support for the instrument and service application form.
We shall handle each and every case individual and a matched proposal shall be created according to the full described LOI. This is a FREE service and we only respond to full described Letter of intents.
We also offer Business Loans to creditworthy companies worldwide. Minimum amount is : € 10,000,000.00
Required Files :
1. Feasibility Study
2. Passport Copy
3. Balance sheet (past 3 year)
4. Business Plan
Please note that this is a separate concept and can be requested and created individual.
As mentioned earlier, we don’t expect anyone to TRUST us, but we kindly request you to be honestly willing to create TRUST with our firm!!
I am looking forward to hearing from you and hopefully meeting you in this beautiful
Letter Of Intent Specimen
General Guideline only!
(Issued on Applicants Letterhead with complete information)
Date:
Place:
Regarding: Letter of Intent
Application for a Bank Instrument
Dear Mr. .....................,
This is to confirm my intention avail a Bank Instrument for the following transaction:
Informative description of the entire transaction:
The Bank Instrument is being used as follows:
The funder is, or will be secured as follows:
Total Face amount should be Dollar/Euro:
Term of Bank Instrument: (Months)
My financial advisor in this transaction is (state full name, city and country):
My legal advisor is (state full name, city and country):
Attached to this letter you will find a copy of my passport (page with picture) and Bank
statement to proof my financial capacity. Bank letter to confirm that, the receiving bank is willing to issue MT103 transaction.
I am the principal in this transaction (if there is an agent involved, please disclose full name and address of introducing agent and eventual financial arrangements)
Signed:
______________
Attached : Copy of passport page with picture
Bank Letter (Receiving Bank) for Issuing MT103 transaction.
Proof of financial capacity
Project Report
>NOTE: Financial capacity can be proven through bank letter addressed to the applicant confirming available funds, or through a bank statement (or similar). Applications without a convincing proof of the fund availability cannot be considered>
Kindest regards,
Doddy
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