EST Regulated Bonds

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Regulated Bonds

Regulated bonds are used to borrow money in wholesale markets. These programs are "regulated" because they fully conform to regulatory procedures and requirements. There is a pool of assets that guarantees repayment to the investor. These assets are ring fenced on the issuer's balance sheet and normally comprise of pool of asset mortgages. For this reason the debt is considered less risky for investors. It often attracts a rating like AAA which also reduces the funding cost for borrowers.This adds emphasis on compliance, management information systems and controls. The funders have the maximum recourse vis-a-vis the pool of assets backing the bonds. Often the pool of assets are held by SPV if the Issuer does not hold the assets. In other words, it is securitization of assets. We have created the facility to secure such opportunities for our clients.

With regulated bonds our clients get the opportunity to raise much needed long term liquidity at a cost that is lower than that of senior debt. It is therefore no surprise that regulators in many countries are keen to encourage asset-backed regulated bond issuance in order to resolve the funding gap that many entities have in their balance sheets.