Borrowing listed Bonds, MTNs and other Securities

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to generate a valid SBLC or BG. Through this concept you can borrow live instruments, listed Bonds, MTNs and other securities already issued, verifiable and available on screen. Specific instruments that you select are purchased by the securities dealer or investor and are leased to you, the borrower. Any of these seasoned instruments are specifically purchased for you and your transaction, taken into the securities account of the investor so that you can have the beneficial use of the security in your transaction. If you need a Bank Guarantee, or an SBLC, a Standby Letter of Credit, the LENDER will purchase the Bond/MTN and will issue a BG/SBLC backed by this Bond/MTN through his own bank to be leased to you, the borrower.

BGs or SBLCs backed by such securities are specifically issued to act as collateral in the financing projects (credit enhancement) or to participate in any legal financial application.

There is no payment to be made in advance for the purchase of the instrument, which is done with the lender’s or investor’s own funds, but the procedure involves the payment of a call option, usually not more than Euro 25,000 (twenty five thousand only) which a borrower has to provide.

Once the seasoned instrument has been selected and both parties have signed the Lending Agreement, the LENDER has to purchase the instrument (that will be leased in the transaction to the client, the BORROWER). If the LENDER purchases the instrument and the Client doesn’t perform, this will cause a loss for the LENDER. With the payment of the call option, the purchase’ price is fixed during its duration, and although its purchase price goes up or down, it will always be fixed with this call option.

When both parties sign the Lending Agreement, the LENDER has to purchase the instrument and the client (the BORROWER) has 25 calendar days to send (to the LENDER) the necessary payment instrument issued by his bank. The actual payment of the lending fee will only be released after reception and verification of the instrument by the BORROWER’s receiving bank.

By accepting the Securities Lending and Borrowing Agreement, and with the payment of the call option, the clients will receive the following documentation, to permit the designated Borrower’s Bank Officer to check authentication and verification of bank instrument:

•           Corporate pre-advice of pro forma invoice with all details of the bank instrument.

•           Corporate Deed of Assignment.

•           Bond Power.

•           Euroclear first page print out.

•           Bloomberg print out and Security card of the stock exchange market where the instrument is quoted.

•           Prospectus of the Instrument Issuing Program (if available).

There are 4 ways to guarantee the payment of the instrument, prior to its issuance:

1.         With an ICPO endorsed by a bank accepted by LENDER (TOP banks)

2.         A promissory note endorsed by a bank accepted by LENDER (TOP banks). This promissory note lets the Client a deferred payment to 180/270 days.

3.         Conditional MT103 or

4.         Confirmed MT700.

The LENDER doesn’t sell financial instruments. You can buy securities directly through your own bank obviously. If you want to purchase the instrument that you have leased, and you want to buy the securities at any stage during the leasing period, you will be given the option to purchase it.

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