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BG/SBLC - BUYING/DISCOUNTING
Inviting Owners/Beneficiarys directly to bank for simple procedure discounting.
Procedures for buying/discounting BGs/SBLCs
We issue Invitation letter for owner/beneficiary to contact our bank officer at ANGLO IRISH BANKING CORP. in London containing details of Buyer/Discounter.
Seller's bank sends short Free Text SWIFT message to ANGLO IRISH without obligation, asking if ANGLO IRISH is interested buy/discount BG/SBLC.
ANGLO IRISH will respond to Seller's bank by SWIFT, asking for submission of BG to be discounted alongwith FPA.
After ANGLO IRISH receives BG and FPA from Seller's bank, Term Sheet for BG discounting will be issued, including payments to beneficiaries listed in FPA.
Finally, Seller's bank responds YES or NO to Term Sheet and if answer is YES, ANGLO IRISH will pay according to Term Sheet
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BGs and SBLCs are normally "off balance sheet" and secretive instruments, often without verifiable ISIN/CUSIP Nos.
These instruments musy be dealt with ""bank to bank", our discounting bank is ANGLO IRISH BANKING Corp. in London
Here is some in depth info on the subject that may be of interest:
Discounting of bank guarantees (BG's)
(Redeeming for cash or raising a credit line)
The "Discounting" of Prime Bank Guarantees (BG's) is based on the following criteria and generally accepted conditions:
Depends on the type of BG, i.e. Face Value (zero coupon); Term Interest Bearing; One Year and One Day; 5, 10, 15, 20 Year; etc.
The preferred BG type is One Year and One Day, but virtually any type of BG is acceptable. The conversion value (Net Cash to Client) may vary dramatically.
Bank Guarantees are defined as those issued by a Major Bank in Europe.
It must be fully understood, the BG is sold outright for a "Cash Value".
The following are some examples of 'Converting a BG to Workable CASH':
Example
Assumes the Bank Guarantee (BG) is the One Year and One Day Type for 1.03 to 1.08 (103 to 108 percent) and issued from a top European Bank.
The following in principal is how the discounting works:
Cash the BG by Selling it outright.
The BG can be discounted at 10+6 percent (10 percent par face value plus the 6 percent interest). Therefore, lets assume 100 million dollars plus the back end of 6 percent maturity value on the face BG amount. This would make the transaction amount have an estimated cash value of 90 Million US Dollars to the client.
The Actual Cash Value on every 100 Million US Dollars (90 Million) would be paid in full at time of transaction and selling of the BG for the full face amount of 100 Million which matures at 106 percent in one year and one day.
The 'Full Cash Amount' is then paid to the client through a Bank-to-Bank wire transfer.
Example
Assumes the bank Guarantee (BG) is for 65 Million US Dollars, interest bearing that matures in 20 years.
The following in principal is how the discounting works:
'Cash' the BG by selling it out right.
The 'BG' can be discounted from 60% to 85% depending on market conditions. Therefore, a 65 million dollar BG is worth in 'CASH' 39 to 55 million.
The 'Full Cash Amount' is then paid to the client through a Bank-to-Bank wire transfer.
Notes
Banks change their policies from time to time, and these are guidelines only.
The BG can be 'Cashed' outright, but 'Credit Lines are more desirable by banks.
The BG after it is 'Cashed' can be put into a High Yield Roll Over Program for Investments (Hyrop). The minimum investment return on a Hyrop to the 'Client' is approximately fifty (50%) percent.
Please see What are "High Yield Roll Over Programs".
The above examples are for BG's issued from Major European Banks.
Hints
BG's are usually issued by a corporation as collateral.
BG's held by individuals are highly questioned by banks throughout the world.
It is generally easier to raise a 'Credit Line' than convert the instrument to CASH!
Fluctuating World Market Conditions set the pace and determine the trading value, if any.
Usually most every instrument can be converted, however, some are just Not desirable
Trading Instruments on the current World Market.
Substantiated "Documentation' is needed for this type of transaction.
IMPORTANT LEGAL REFERENCES:
http://townsend-law.netfirms.com/slc.htm
http://townsend-law.netfirms.com/bankguaranteesx.htm
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BUYING MTNs
Also STRUCTURED NOTES via Security House
Inviting Seller or Seller's direct representative talk to Buyer's direct representative.
WE ARE LOOKING FOR SPOT BUY.
JUST EURO CLEAR PRINT OUT OR BLOOMBERG PRINT OUTHAS NO MEANING.
WE NEED FULL PROPOSAL WHICH SHOULD INCLUDE THE FOLLOWING TO ENSURE IMMEDIATE ACTION:
SCREENSHOT WITH ISIN #
TERM SHEET/PROSPECTUS
SELLER/OWNER DETAILS
CUSTODIAN BANK
WE ARE READY TO SEND FULL DETAILS OF BUYER WITH BANK DETAILS PROVIDED WE HAVE FIRM AND COMPLETE OFFER.
WE WILL NOT SEND LOI WITHOUT PROPER DETAILS OF PROVIDER
ABOVE POINTS ARE INTENDED TO SAVE TIME AND EFFORT FOR ALL WHO WISH TO WORK AND TRADE WITH US.
To all perspective sellers, representatives, mandates, brokers e.t.c.
We do directly represent a number of buyers of MTNs, and there are no broker chains involved.
All our buyers have Fed ID.
On the first transaction, we are interested in only Spot Deals, DvP procedure.
Under no circumstances we issue POF, BCL, or RWA from the Bank, upfront, as we are not allowed to shop around; it does not have any value for the actual transaction; and is physically not possible taking into account credit line issues and the number of offers we get on daily basis.
All our movements start at the stage where the Seller has existing, legally titled instrument/securities to transact and makes an offer to us in the form of corporate invoice.
Buyers' side commission is always closed and we issue the FPAs only to the sellers' brokers, in certain, very rare cases; preferring they make their own arrangements with the client (seller) they represent.
Considering the above clause, we would highly appreciate, if the prices which sellers/brokers declare in their offers were stated as plain figure without XX+X% basis.
The time limit for taking down the instrument is 48 hours from the moment of invoices being endorsed.
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