Institutional Bond Loans

Institutional Bond Loans

Platinum Global Bridging Finance provides institutional bond loans and institutional bond financing funding through their close links to our private lending institutions we have developed close relationships with. We can offer various bond loan structures to release monies from your existing  bond in as little as 10 to 14 days. We mainly use off market private lending institutions with access to capital from investment funds and high net worth lending pools not available on the open lending market. Our lenders range from Banks, Investment Banks, Private Family Offices, Financial Institutions, Private Institutions, Asset Managers, Hedge Fund Lenders, Specialist private institutional bond lenders all the way through to High Net Worth Private Individuals that can take a specialist view upon investment grade bonds. Our diverse lenders are based around the world in Europe, United States, London, Hong Kong, Singapore and Switzerland. We cover nearly all institutional bond lending markets globally and can secure the best lending terms for our bond lending clients. We cover non recourse bond loans,  non title transfer bond loans, title transfer bond loans and our lenders can also look to loan against trade-able bonds and other stock market tradable instruments with an ISIN code. If your financial product has an identifiable International Securities Identification Number (ISIN) code we can look for lending terms for you from our range of lenders. Lending amounts can be from USD3m but as bond values tend to start from USD100m and move upwards into the billions of US dollars our lenders normally lend from USD100m and have capabilities to issue lending up to USD2 billion.

Bong Loan Criteria

Our lenders Fixed Income Loan product means that they will loan against bonds.

The criteria is pretty strict for bonds which is listed as per below:

1. Must have ISIN
2. Must have a credit rating by a recognized agency
3. Issuer of the bond must be based in an accepted market
4. Corporate bonds only, no government bonds or other types of notes
5. Needs to have trading activity
6. Bond must have more than 24 months remaining until maturity (min loan term is 24 mo)
7. Min loan amount is strictly adhered to
8. Only bonds from secondary market are accepted, no primary issuance’s (new issuance’s direct from the company)
9. Position offered should not exceed 5%-10% of total issuance

There are five main types of bonds:

• Corporate bonds are debt securities issued by private and public corporations.
• U.S. Treasuries are issued by the U.S. Department of the Treasury on behalf of the federal government. They carry the full faith and credit of the U.S. government, making them a safe and popular investment. Types of U.S. Treasury debt include:
  • Treasury Bills. Short-term securities maturing in a few days to 52 weeks
  • Notes. Longer-term securities maturing within ten years
  • Bonds. Long-term securities that typically mature in 30 years and pay interest every six months
  • TIPS. Treasury Inflation-Protected Securities are notes and bonds whose principal is adjusted based on changes in the Consumer Price Index. TIPS pay interest every six months and are issued with maturities of five, ten, and 30 years.
• Investment-grade.  These bonds have a higher credit rating, implying less credit risk, than high-yield corporate bonds.
• High-yield.  These bonds have a lower credit rating, implying higher credit risk, than investment-grade bonds and, therefore, offer higher interest rates in return for the increased risk.
• Municipal bonds, called “munis,” are debt securities issued by states, cities, counties and other government entities. Types of “munis” include:
  • General obligation bonds. These bonds are not secured by any assets; instead, they are backed by the “full faith and credit” of the issuer, which has the power to tax residents to pay bondholders.
  • Revenue bonds. Instead of taxes, these bonds are backed by revenues from a specific project or source, such as highway tolls or lease fees.  Some revenue bonds are “non-recourse,” meaning that if the revenue stream dries up, the bondholders do not have a claim on the underlying revenue source.
  • Conduit bonds. Governments sometimes issue municipal bonds on behalf of private entities such as non-profit colleges or hospitals. These “conduit” borrowers typically agree to repay the issuer, who pays the interest and principal on the bonds. If the conduit borrower fails to make a payment, the issuer usually is not required to pay the bondholders.

Our unique relationships with our private institutional lenders allows us to offer Corporate Bond Loans, US Treasury Bond Loans, Investment Grade Bond Loans, High Yield Bond Loans and Municipal Bond Loans along with many other types of loans against institutional bonds.

What are Bonds ?

Bonds are issued by organizations generally for a period of more than one year to raise money by borrowing.

Organizations in order to raise capital issue bond to investors which is nothing but a financial contract, where the organization promises to pay the principal amount and interest (in the form of coupons) to the holder of the bond after a certain date. (Also called maturity date).Some Bonds do not pay interest to the investors, however it is mandatory for the issuers to pay the principal amount to the investors.

What is a Maturity Date ?

Maturity date refers to the final date for the payment of any financial product when the principal along with the interest needs to be paid to the investor by the issuer.

Characteristics of a Bond

• A bond is generally a form of debt which the investors pay to the issuers for a defined time frame. In a layman’s language, bond holders offer credit to the company issuing the bond.
• Bonds generally have a fixed maturity date.
• All bonds repay the principal amount after the maturity date; however some bonds do pay the interest along with the principal to the bond holders.

Other Types of Bonds

Following are the types of bonds:

1. Fixed Rate Bonds

   In Fixed Rate Bonds, the interest remains fixed through out the tenure of the bond. Owing to a constant interest rate, fixed rate bonds are resistant to changes and fluctuations in the market. We can offer fixed rate bond loans.

2. Floating Rate Bonds

   Floating rate bonds have a fluctuating interest rate (coupons) as per the current market reference rate. We can offer floating rate rate bond loans.

3. Zero Interest Rate Bonds

   Zero Interest Rate Bonds do not pay any regular interest to the investors. In such types of bonds, issuers only pay the principal amount to the bond holders. We can offer zero interest rate bond loans.

4. Inflation Linked Bonds

   Bonds linked to inflation are called inflation linked bonds. The interest rate of Inflation linked bonds is generally lower than fixed rate bonds. We can offer inflation linked bond loans.

5. Perpetual Bonds

   Bonds with no maturity dates are called perpetual bonds. Holders of perpetual bonds enjoy interest throughout. We can offer perpetual bond loans.

6. Subordinated Bonds

   Bonds which are given less priority as compared to other bonds of the company in cases of a close down are called subordinated bonds. In cases of liquidation, subordinated bonds are given less importance as compared to senior bonds which are paid first. We can offer subordinated bond loans.

7. Bearer Bonds

   Bearer Bonds do not carry the name of the bond holder and anyone who possesses the bond certificate can claim the amount. If the bond certificate gets stolen or misplaced by the bond holder, anyone else with the paper can claim the bond amount. We can offer bearer bond loans.

8. War Bonds

   War Bonds are issued by any government to raise funds in cases of war. We can offer war bond loans.

9. Serial Bonds

   Bonds maturing over a period of time in installments are called serial bonds. We can offer serial bond loans.

10. Climate Bonds

    Climate Bonds are issued by any government to raise funds when the country concerned faces any adverse changes in climatic conditions. We can offer climate bond loans.

What Are Corporate Bonds?

A bond is a debt obligation, like an IOU. Investors who buy corporate bonds are lending money to the company issuing the bond. In return, the company makes a legal commitment to pay interest on the principal and, in most cases, to return the principal when the bond comes due, or matures.

To understand bond loans, it is helpful to compare them with stocks. When you buy a share of common stock, you own equity in the company and will receive any dividends declared and paid by the company. When you buy a corporate bond, you do not own equity in the company. You will receive only the interest and principal on the bond, no matter how profitable the company becomes or how high its stock price climbs. But if the company runs into financial difficulties, it still has a legal obligation to make timely payments of interest and principal. The company has no similar obligation to pay dividends to shareholders. In a bankruptcy, bond investors have priority over shareholders in claims on the company’s assets.

Like all investments, bonds carry risks. One key risk to a bondholder is that the company may fail to make timely payments of interest or principal. If that happens, the company will default on its bonds. This “default risk” makes the creditworthiness of the company—that is, its ability to pay its debt obligations on time—an important concern to bondholders.

What are the basic types of corporate bonds?

Corporate bonds make up one of the largest components of the U.S. bond market, which is considered the largest securities market in the world. Other components include U.S. Treasury bonds, other U.S. government bonds, and municipal bonds.

Companies use the proceeds from bond sales for a wide variety of purposes, including buying new equipment, investing in research and development, buying back their own stock, paying shareholder dividends, refinancing debt, and financing mergers and acquisitions.

A bond loan can be classified according to their maturity, which is the date when the company has to pay back the principal to investors. Maturities can be short term (less than three years), medium term (four to 10 years), or long term (more than 10 years). Longer-term bonds usually offer higher interest rates, but may entail additional risks.

Bonds and the companies that issue them are also classified according to their credit quality. Credit rating agencies assign credit ratings based on their evaluation of the risk that the company may default on its bonds. Credit rating agencies periodically review their bond ratings and may revise them if conditions or expectations change.

Based on their credit ratings, bonds can be either investment grade or non-investment grade. Investment-grade bonds are considered more likely than non-investment grade bonds to be paid on time. Non-investment grade bonds, which are also called high-yield or speculative bonds, generally offer higher interest rates to compensate investors for greater risk.

Bonds also differ according to the type of interest payments they offer. Many bonds pay a fixed rate of interest throughout their term. Interest payments are called coupon payments, and the interest rate is called the coupon rate. With a fixed coupon rate, the coupon payments stay the same regardless of changes in market interest rates.

Other bonds offer floating rates that are reset periodically, such as every six months. These bonds adjust their interest payments to changes in market interest rates. Floating rates are based on a bond index or other benchmark. For example, the floating rate may equal the interest rate on a certain type of Treasury bond plus 1%.

One type of bond makes no interest payments until the bond matures. These are called zero-coupon bonds, because they make no coupon payments. Instead, the bond makes a single payment at maturity that is higher than the initial purchase price. For example, an investor may pay $800 to purchase a five-year, zero-coupon bond with a face value of $1,000. The company pays no interest on the bond for the next five years, and then, at maturity, pays $1,000—equal to the purchase price of $800 plus interest, or original issue discount, of $200. Investors in zero-coupon bonds generally must pay taxes each year on a prorated share of the interest before the interest is actually paid at maturity.

US Treasury Bond Loans

What Are US Treasuries Bonds

Treasury bonds (T-bonds) are government debt securities issued by the U.S. Federal government that have maturities greater than 20 years. T-bonds earn periodic interest until maturity, at which point the owner is also paid a par amount equal to the principal. Treasury bonds are part of the larger category of U.S. sovereign debt known collectively as treasuries, which are typically regarded as virtually risk-free since they are backed by the U.S. government’s ability to tax its citizens.

Treasury bonds (T-bonds) are one of four types of debt issued by the U.S. Department of the Treasury to finance the U.S. government’s spending activities. The four types of debt are Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation-Protected Securities (TIPS). These securities vary by maturity and coupon payments.

All of them are considered benchmarks to their comparable fixed-income categories because they are virtually risk-free. T-bonds are backed by the U.S. government, and the U.S. government can raise taxes and increase revenue to ensure full payments. These investments are also considered benchmarks in their respective fixed-income categories because they offer a base risk-free rate of investment with the categories’ lowest return. T-bonds have long duration’s, issued with maturities of between 20 and 30 years.

As is true for other government bonds, T-bonds make interest payments semiannually, and the income received is only taxed at the federal level. Treasury bonds are issued at monthly online auctions held directly by the U.S. Treasury. A bond’s price and its yield are determined during the auction. After that, T-bonds are traded actively in the secondary market and can be purchased through a bank or broker.

Individual investors often use T-bonds to keep a portion of their retirement savings risk-free, to provide a steady income in retirement, or to set aside savings for a child’s education or other major expenses. Investors must hold their T-bonds for a minimum of 45 days before they can be sold on the secondary market.

Treasury Bond Considerations

Treasury Bond Maturity Ranges

Treasury bonds are issued with maturities that can range from 20 to 30 years. They are issued with a minimum denomination of $100, and coupon payments on the bonds are paid semiannually. The bonds are initially sold through an auction; the maximum purchase amount is $5 million if the bid is noncompetitive (or 35% of the offering if the bid is competitive). A competitive bid states the rate the bidder is willing to accept; it is accepted depending on how it compares with the set rate of the bond. A noncompetitive bid ensures the bidder gets the bond, but they have to accept the set rate. After the auction, the bonds can be sold in the secondary market.

The Treasury Bond Secondary Market

There is an active secondary market for T-bonds, making the investments highly liquid. The secondary market also makes the price of T-bonds fluctuate considerably in the trading market. As such, current auction and yield rates of T-bonds dictate their pricing levels on the secondary market. Similar to other types of bonds, T-bonds on the secondary market see prices go down when auction rates increase because the value of the bond’s future cash flows is discounted at the higher rate. Inversely, when prices increase, auction rate yields decrease.

Treasury Bond Yields

In the fixed-income market, T-bond yields help to form the yield curve, which includes the full range of investments offered by the U.S. government. The yield curve diagrams yield by maturity, and it is most often upward sloping (with lower maturities offering lower rates than longer-dated maturities). However, the yield curve can become inverted when long-term rates are lower than short-term rates. An inverted yield curve can signal an upcoming recession.

Investment Grade Bond Loans

What Is An Investment Grade Bond?

Bonds that are believed to have a lower risk of default and receive higher ratings by the credit rating agencies, namely bonds rated Baa (by Moody’s) or BBB (by S&P and Fitch) or above. These bonds tend to be issued at lower yields than less creditworthy bonds.

An investment grade is a rating that signifies a municipal or corporate bond presents a relatively low risk of default. Bond rating firms like Standard & Poor’s and Moody’s use different designations, consisting of the upper- and lower-case letters “A” and “B,” to identify a bond’s credit quality rating.

“AAA” and “AA” (high credit quality) and “A” and “BBB” (medium credit quality) are considered investment grade. Credit ratings for bonds below these designations (“BB,” “B,” “CCC,” etc.) are considered low credit quality, and are commonly referred to as “junk bonds.”

Understanding Investment Grade Bonds

Credit ratings are extremely important because they convey the risk associated with buying a certain bond. An investment grade credit rating indicates a low risk of a credit default, making it an attractive investment vehicle—especially to conservative investors.

Investors should note that government bonds, also known as Treasuries, are not subject to credit quality ratings, yet these securities are nevertheless considered to be of the very highest credit quality.

In the case of municipal and corporate bond funds, a fund company’s literature, such as its fund prospectus and independent investment research reports, will report an “average credit quality” for the fund’s portfolio as a whole.

Investment Grade Bond Credit Rating

Investment grade issuer credit ratings are those rated above BBB- or Baa. The exact ratings depend on the credit rating agency. For Standard & Poor’s, investment grade credit ratings include:

• AAA
• AA+
• AA
• AA-

Companies with any credit rating in this category boast a high capacity to repay their loans; however, those awarded an AAA rating stand at the top of the heap and are deemed to have the highest capacity of all, to repay loans.

The next category down includes the following ratings:

• A+
• A
• A-

Companies with these ratings are considered to be stable entities with robust capacities for repaying their financial commitments. However, such companies may encounter challenges during deteriorating economic conditions.

The bottom tier of investment grade credit ratings delivered by Standard and Poor’s include:

• BBB+
• BBB
• BB-

Companies with these ratings are widely considered to be “speculative grade” and are even more vulnerable to changing economic conditions than the prior group. Nevertheless, these companies largely demonstrate the ability to meet their debt payment obligations.

According to Moody’s, investment grade bonds comprise the following credit ratings:

• Aaa
• Aa1
• Aa2
• Aa3
• A1
• A2
• A3
• Baa1
• Baa2
• Baa3

The highest-rated Aaa bonds possess the least credit risk of a company’s potential failure to repay loans. By contrast, the mid-tier Baa-rated companies may still have speculative elements, presenting high credit risk–especially those companies that paid debt with expected future cash flows, that failed to materialize as projected.

What are some key risks in high-yield corporate bonds?

Some investors with a greater risk tolerance may find high-yield corporate bonds attractive, particularly in low interest rate environments. If you are considering buying a high-yield bond, it is important that you understand the risks involved.

Default risk.Also referred to as credit risk, this is the risk that a company will fail to make timely interest or principal payments and default on its bond. Defaults also can occur if the company fails to meet certain terms of its debt agreement. Because high-yield bonds are typically issued by companies with higher risks of default, this risk is particularly important to consider when investing in high-yield bonds.

Interest rate risk.Market interest rates have a major impact on bond investments. The price of a bond moves in the opposite direction than market interest rates—like opposing ends of a seesaw. This presents investors with interest rate risk, which is common to all bonds. In addition, the longer the bond’s maturity, the more time there is for rates to change and, as a result, affect the price of the bond. Therefore, bonds with longer maturities generally present greater interest rate risk than bonds of similar credit quality that have shorter maturities.

Economic risk.  If the economy falters, some investors are likely to try to sell their bonds. In what is known as a “flight to quality,” a number of investors may decide to replace their riskier high-yield bonds with safer ones, such as U.S. Treasury bonds. If there are more sellers than buyers for high-yield bonds, the supply will exceed demand and prices of the bonds will fall. In addition, some companies that issue high-yield bonds may be less able to weather challenging economic circumstances, increasing the risk of default.

Liquidity risk.  Liquidity is the ability to sell an asset, such as a bond, for cash when the owner chooses. Bonds that are traded frequently and at high volumes may have stronger liquidity than bonds that trade less frequently.  Liquidity risk is the risk that investors seeking to sell their bonds may not receive a price that reflects the true value of the bonds (based on the bond’s interest rate and creditworthiness of the company). High-yield bonds may be subject to more liquidity risk than, for example, investment-grade bonds.

Municipal Bond Loans

What Are Municipal Bonds?

A municipal bond is a debt security issued by a state, municipality or county to finance its capital expenditures, including the construction of highways, bridges or schools. They can be thought of as loans that investors make to local governments. Municipal bonds are exempt from federal taxes and most state and local taxes, making them especially attractive to people in high income tax brackets.

What Are Institutional Bond Loans

We help with capitalization through the release of funds from an institutional bond. As mentioned these can be corporate bonds, investment grade bonds, high yield bonds, municipal bonds and treasuries.This allows bond holders or owners of publicly traded bonds the flexibility to gain access to the locked up value of their freely traded bond holding position. The bond financing transaction program is designed specifically for corporations, its employees, officers and major holders of publicly traded bonds while providing total privacy to our clients. Our goal is to help you obtain the best institutional bond financing structures possible in today’s marketplace. If you’ve never considered bond loans, bond financing to release equity, or the unique proprietary forms of capitalization that will put liquidity in your pocket, we can help you understand how your liquidity options work with an equity release plan from your institutional grade bond.

We always go the extra mile to get you the best rates, lowest fees, and terms you deserve for your institutional grade bond borrowing and lending.

How Long Does It Take To Get An Institutional Bond Loan?

Our unique position with links to a number of Institutional Bond Loan lenders means we collaborate with owners of publicly and privately traded stocks on the terms of each and every stock lending financing transaction. Our process is quick, transparent and completely confidential. Financing proceeds can be used for personal or business purposes, or to diversify or hedge current stock positions. Funding is quick with a transaction closing in as little as 10 to 14 business days. Same day funding is available contact us to find out more.