A Buyer’s funds aren’t AT ANY effective RISK. A Buyer’s funds are ALWAYS used to buy liquid fiscal instruments which are worth seriously more than the applicable price: the purchase is often collateralized at close to a 200% level. Example: buy at 30% and have a ready wholesale market in the 60s%. Whether the instruments are bought at 31% or 81%: they are issued by credit-worthy/AA or AA-rated banks, possess market-competitive interest rates, and have a retail market value in the 90s%. So, as long as their Trader can buy low and sell high, a profit will be made with NO effective risk. The customer is contracting in some cases without delay with the Trading Bank, or other verifiable financial institutions and/or banks. Closings happen at major banks or legal corporations — there isn’t any “coffee table closing” at a restaurant. The quantity of profit is a result of volume — bucks involved and the quantity of times a bank day when a provider is able to buy and resell into the monetary market. Most Cutting houses do one tranche/bank day. The largest traders can do several such tranches — from different sources to different exit-buyers.
The CLOSING is finished only AFTER a mutual required research. The provider first checks-out the possible customer. Then the Provider’s officer contacts the client. At that time secret information and reciprocal required groundwork info is shared, so the Client’s fiscal institution and/or advisors can develop an amount of comfort about the transaction and the caliber of the provider establishment. There’s not much “blind faith” concerned. If the Client/Buyer isn’t snug, he only says “thank you, but no thank you” and exits the negotiation or closing.
Despite the growing number of people actively participating in the private placement and bank instrument business, there are very few that truly understand what a medium term note is. Though this amuses us to some degree, it also has alarmed us enough to take action. Since the “MTN” (medium term note) is a major reason the private placement business exists, we felt like it would be a good idea to connect the dots for our readers with less experience.For those of you who understood bank instruments prior to this article, we hope this provides additional insight to educate you further. For the rest of our readers, this information will open the door to a new understanding of wealth, while providing facts to help remove uneducated brokers from your network. By definition, Medium Term Notes (MTN’s) are debt instruments which are created by banks and sold to investors, having a predefined face value, date of maturity, and annual interest rate.For example, you may have a 10 year note issued from Barclays Bank worth 100M, collecting a coupon (interest) of 6.5% per year. Each year you would receive 6.5M until the date of its maturity, where you may cash it in for its full face value. Though an MTN has similar characteristics to other debt notes, it is completely unique due to its flexibility, price, resale potential, and ability to be purchased at a discount from face. Now that you know what a medium term note is, let’s see why they have become so popular recently.
Over 50 years ago, when medium term notes (MTN) started to become available, there were very few passive investments which could compete with the benefits of owning a bank instrument. Given the high annual interest rate, possible discount from face value, and solid backing by top 25 banks, many flocked toward those who issued and owned the notes, looking for ways to financially capitalize. Once the idea of “trading bank instruments” caught on in the secondary market, the private placement business grew steadily, until the entire business changed with the introduction of the internet.
With the explosion of the internet, the secondary market has been flooded with tons of new brokers trying to broker buy/sells of medium term notes, and bank guarantees. The real discussions about bank instruments, at least for those who are successful, revolve around private placement programs.
Bank instruments, such as medium term notes and bank guarantees, are the lifeblood to any private placement program. Since these notes can be purchased at a discount from top banks, traders can earn quite a hefty profit, all while being risk free due to a prior contractual obligation they had with an “exit buyer”.
As we all know, an “exit buyer” is the entity which purchases the MTN/BG at a slightly higher value, but still discounted from face. Once the first exit buyer purchases the note from the trader, the process repeats itself several times until a final buyer purchases it to hold until maturity. By that time, the note has a very small discount (ex. 93% of face), but many conservative buyers are happy with the remaining spread and annual interest.[/vc_column_text][/vc_column][/vc_row][vc_row fullwidth=”yes” top_margin=”0″ bottom_margin=”0″][vc_column][vc_column_text el_class=”fz-18″]
We have access to several high level sources for financial services for your personal and business needs. We also have made the process easy for you. We understand the market place and can provide the resources needed to Purchase Trade and Monetize your financial instruments including BG’s, SBLC’s, MTN’s, LTN’s, BONDS, PFCE and in ground assets. The services provided are through our trusted partners and relationships that we can share with you to assist with your specific needs.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text el_class=”fz-18″]
The Cutting House is an extension of the Fed Reserve, which sets policy.The Cutting House can sell at such a low amount because its minimum tranche is $500 Million and its Minimum contract is mostly measured in the many billions of greenbacks. It’s the Volume of the transaction which warrants the low price . If the minimum tranching is under $500 Million, Collateral suppliers (which is one rung beneath the Cutting House, and which usually buy from the Cutting House) sell at minimum costs in perhaps the 60s%. ( for MTNs ) and 70s ( for BGs )
The Cutting House is in danger. It places its assets (customarily gold deposits) at risk as security to the issuing banks, to promise that cash or liquid assets exist to honor the deep-discount contract. That is why the Cutting houses prefer buy-sells: they’re assured that their exit customers (who buy at increments of LESS than $500 Million, but are track-record performers) won’t default. These exit-buyers are wholesalers, who buy in large quantities and then resell to smaller wholesalers or retail consumers in smaller increments. The final end-user is generally a pension or annuity fund, which frequently buys at costs as high as in the low-90s.
The 30 point maximum (20 points if the purchaser is USA-based) add-on to the sales price is a range established by the Fed. Not all sellers resell at the maximum spread — it depends on whom they’re reselling to. This “spread” applies only to Fresh Cut sales, not to mark-ups in the secondary (seasoned paper) market.
When a customer does a deal, the closing is bank-to-bank. The Client’s bank issues a conditional swift of funds, meaning that its funds aren’t spent unless and till the other side commits to broadcasting the contracted-for MTNs. There isn’t any “trust me” concerned. IF at any time there’s a non-delivery of the contracted monetary instruments at the contracted price, the whole contract is ended for non-performance. No Buyer is locked-into stumping up for instruments it won’t receive. The reason the System is meant to aid the “buy and resell” wholesale market rather than the “buy and keep” retail market is perhaps because the Contract typically requires that a portion of the resulting profit is used to fund projects — development, humanitarian, educational, infrastructural, for example. — around the globe. This is one key reason how major capital projects (some with minor profitability and/or high-risks of profitability) are subsidized. This is how many relief efforts and substructure in war-torn areas are financed. The more military conflict and destruction and natural tragedies there are, the more exaggerated is the need for funds – and one important provider of such funds is a portion of the “price spread” on these funds-first and/or collateral-first purchases and resales. The purchaser must COMMIT to spending some of its gigantic profits on funding worldwide approved projects or causes. If the Client/ consumer does not have such projects, the Collateral Provider/Cutting House can supply it.
The Cutting House can sell EITHER a DIRECT SALE or a BUY-SELL ** Contract ** (Buy-sell implies that the Cutting House provides BOTH the Fresh Cut Instruments, and the exit-Buyer to whom you can straight away resell your instruments.)[/vc_column_text][vc_separator][vc_custom_heading text=”Is A Bank Instrument Buyer at Risk ? ” font_container=”tag:h2|font_size:22|text_align:left” google_fonts=”font_family:Montserrat%3Aregular%2C700|font_style:700%20bold%20regular%3A700%3Anormal”][/vc_column][/vc_row][vc_row][vc_column][vc_cta_button2 h2=”” txt_align=”center” title=”CONTACT US NOW” size=”lg” position=”bottom” link=”url:contact-us||”][/vc_cta_button2][/vc_column][/vc_row][vc_row][vc_column][vc_separator][vc_custom_heading text=”UNDERSTANDING PPP BANK INSTRUMENT TRANSACTIONS” font_container=”tag:h2|font_size:22|text_align:left” google_fonts=”font_family:Montserrat%3Aregular%2C700|font_style:700%20bold%20regular%3A700%3Anormal”][vc_column_text el_class=”fz-18″]Why Do Major Banks Sell Short and/or Medium Term Debenture/Debt At Steep rebates?
Most people, do no truly understand that the Term Mid Term Note otherwise known as (MTN) or Long Term Note or (LTN) are nothing more than a ” debenture bond” or fixed income instruments.. If you use the term MTN or LTN with a real provider of paper they will know your a broker and probably have no idea what your talking about.
The definition for a Debenture bond is as follows.
1) (Banking & Finance) Also called: debenture bond a long-term bond, bearing fixed interest and usually unsecured, issued by a company or governmental agency
2. (Banking & Finance) a certificate acknowledging the debt of a stated sum of money to a specified person
3. (Commerce) a customs certificate providing for a refund of excise or import duty
debenture bond2. (Banking & Finance) a certificate acknowledging the debt of a stated sum of money to a specified person
Most brokers would do themselves favor and not get involved in Paper/ Bank instruments unless they have solid relationships with real sources. It takes years to understand this market and the best way to approach this would be to simply make introductions between paper providers and buyers. The issues lies in the fact that 99.999 of people out there that claim to have access to paper are unable to perform. You will find that there is plenty of buyers that are RWA however, its the paper that is for the most part extremly difficult to procure and or gain access to.
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The reason why a Top one hundred World Bank would sell instruments at ANY discount rate is the “fractional banking system”. Dependent on jurisdictions, for every $1 in a bank’s capital account, the bank can leverage that money to loan a multiplier effect of greenbacks — generally ranging from 10 or even more times. Therefore if a bank sells (as a example) a $100,000,000 MTN instrument at 30 percent, it has $3+ Million in its capital account and can lend recounted $3+ Million yearly for the duration of the instrument. The offset is the interest the Bank has to pay on the MTN.
The other critical factor to understand is that this fractional system and MTN issuance is mainly “off-balance sheet” financing, so such multi-billion buck MTN issuance does not adversely effect the capital structure or integrity of the issuing banks (which are usually ONLY the top twenty-five world EU banks). They are not handling MTNs issued by tiny banks or banks with feeble balance sheets.[/vc_column_text][vc_separator][vc_custom_heading text=”What is the Cutting House’s Role in Bank Instruments Transactions? ” font_container=”tag:h2|font_size:22|text_align:left” google_fonts=”font_family:Montserrat%3Aregular%2C700|font_style:700%20bold%20regular%3A700%3Anormal”][/vc_column][/vc_row][vc_row][vc_column]
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