PRIVATE PLACEMENT PLATFORM EXPLAINED
Most people appear to have misconceptions concerning how someone can earn high yield investment returns of up to 100% a week or a month.
This article should help you understand not only why it is possible but why it is necessary to keep the world financial system operating. ” The information provided here is for educational purposes only and should not be construed as financial or investment advice
UNDERTANDING PPP The Private Placement Trading industry is a mechanism for reusing the world’s debt, and estimations range from $255 to 600 billion dollars.
Should this debt be called at maturity without replacement by additional capital or debt, we would reach a point where the financial markets would not be able to sustain.
This would lead to the collapse of the global banking system and the collapse of companies. It was therefore necessary to find a way of recycling and selling debt instruments to investors at maturity, primarily in the form of MTNs (Medium Term Notes), based on very large USD denominations, in order to ensure that debt can be sold to investors.
The MTNs are typically sold through a conduit to institutional investors and then sold to pension funds in bulk. This is commonly called “Private Placement”.
Through the conduit, the trader can avoid a rule that prohibits a bank from holding another bank’s paper, thereby ensuring that this rule is not broken.
Banks will frequently choose to liquidate some of their debt book, setting the amount to be liquidated, the level of discount on each instrument, and instructing a trader to initiate a market.
In the fine print of any loan taken out by a customer over the last two decades you’ll see the phrase “the bank reserves the right to transfer to another lender without notice.”.
Loans to corporations are no different. Pepsi, Aramco, Boeing, and others, issue corporate MTNs, which are treated similarly to bank MTNs.
PPP TRADING PRACTICE: Traders may choose to mix MTNs with investment grade bonds to initiate a trade.
Usually a trader will purchase an instrument at a discount and sell it later, generating a net book profit that ranges from 1.5% to 9%, depending on the instrument’s quality.
This is book profit, not earned interest. The explanation for the high yields of PPP trading is as follows: It can be done multiple times daily by a trader; trading is generally conducted four days a week and bookkeeping is done on Monday.
Hence, a trade with relatively low-grade income, such as 2% per trade but 5 times per day for 4 days, would generate 40% per week. Papers of higher quality earn a larger multiple.
Trading frequency is determined by a variety of factors. A trader might determine how many transactions and in what value every trading day would be if a bank sold € 50 billion of debt over, say, 6 months, taking into account interruptions, bank holidays, and so on.
It means that agreements are reached and contracts are executed with the buyer, which will result in a ‘buy ticket’ confirming the buyer’s intent and funds. Upon acceptance, the buyer pays the seller automatically in multiple tranches after the trader screens the instrument.
These are typically collateral-first transactions with major banks and institutions. After initial electronic transfer, the paper is sent by bonded courier in hard copy at agreed upon intervals. The trader acts contractually for and on behalf of PPP Investors in all such transactions, using the investor’s cash or asset as collateral for them.
