AN INTRODUCTION TO PRIVATE PLACEMENT
None of the customary standards and practices that apply to normal, conventional business, investing and finance applies to Project Funding Programs. It is a “privilege” to be invited to participate in a Private Placement Transaction Program, not a “right.” The trading administrators and managers have a virtually endless supply of financially qualified applicants.
WHAT IS A PRIVATE PLACEMENT PROGRAM?
Private Placement Program or high-profit investment programs are safe, private and “only invite-to-join” trading programs for financial instruments (especially MTN). They are offered by the banks. These instruments are first bought early for their nominal value with a significant discount, which are sold afterwards for a higher price in the secondary market. The difference between the selling price and the purchase price is the profit of the supplier/investor. These programs are offered only to customers with high purchasing power and such transactions may only be carried out by licensed dealers. Most of the revenues are used to finance humanitarian purposes and business projects.
Private Placement Programs exist to ‘create’ money and money is created by creating debt. As an example, you as an individual can agree to loan $100 to a friend with the understanding that the interest for the loan will be 10%, resulting in a total of $110 to be repaid. What you effectively have done is creating $10, even though that money cannot be seen initially. Banks do this sort of lending every day, however when the amount gets higher, it gives banks the power to create money. Private Placement Programs involve trading with discounted bank-issued debt instruments which defer payment obligations, or debts.
Theoretically, any person, company, or organization can issue debt notes. Debt notes are, in a sense, deferred payment liabilities. The Private Placement Program market is changing and it is no longer limited to governments and MTN, also, industrial companies and banks can issue their own debt instruments. Debt notes such as Medium Terms Notes (MTN), Bank Guarantees (BG), and Stand-By Letters of Credit (SBLC) are issued at the discounted prices by major world banks in the amount of $-billions every day.
All trading programs in the Private Placement Program area include trading with discounted debt notes. Furthermore, in order to bypass the legal restrictions, this trading can only be done on a private level. This is the main difference between trading with Private Placement Program and “normal” trading, which is highly regulated. Private Placement level business transactions are free from the usual restrictions in the securities market. It is based on reliable, essential, special relationships and protocols.
However, none of these programs can be started unless there are sufficient funds to support each transaction. At this point, the customer is needed, because the banks and the covenantees are not allowed to trade with their own capital or with the capital of the costumers, as long as they do not have the sufficient funds.
It is important to understand the basic reasons for the existence of Private Placement Programs. This document explains the core concept of what money is and how it is created; controlling the demand for money and credit, and the process of issuing a debt note; discounting the note, and selling and reselling it in arbitrage transactions – and how all this leads to exceptional profits, often used for major project or (private) corporate financing.
Raising funds for a given project is usually at the top of the to-do-list when a company, foundation or a nation has a need. Conventional financing avenues can be quite disappointing in today’s environment, as banks and other financial institutions are strapped for cash, or lending requirements are too unforgiving. Many people working in finance today do not have the institutional memory to avail themselves of the mechanisms which were created to provide non-recourse, non-repayable funding from the activities of a specialized system emitting from the top-levels within the banks, the IMF, and other authorities oversight.
At the highest levels in the world of project funding, not publicly known but in place for decades, Infrastructure, Humanitarian and Environmental projects have been built utilizing the Project Funding Program we have been discussing to work in developing and developed nations.
A Project Funding Program is internationally sanctioned by two worldwide monetary authorities and is operated under contract and license to a private banking organization that is tasked to generate new funds for the never-ending needs of projects.
It does this by utilizing a system of specialized trading involving the major banks, and other organizations under this system. By Leveraging an investor’s assets safely, and using them to be the foundation for a non-recourse credit line from a major central bank, the program operates to create enormous project funding. This is a Project Funding Program operating for decades, silently and quietly in the background to fund large needs which cannot otherwise be funded for the benefit of a nation or a commercial enterprise.
Access to this program requires a minimum of 100- Million Euro in either cash in a recognized and approved bank, or a Standby Letter of Credit, a Bank Guarantee, a Medium-Term bank note, or certain other assets with full bank responsibility.
More details are provided to a principal signatory investor with an initial interview with the Intake/Compliance Officer of the program, along with documentation and other items necessary to evaluate the investor’s qualifications for entry into a program.
This Guide is written with the intent of assisting those considering entering this market to make the right decisions. It explains some of the obscure or unclear aspects of Private Placement Programs and has been prepared from personal experience, and also plagiarizing content from papers produced by others who, because of the confidential and sensitive nature of these programs, prefer to remain anonymous. DOWNLOAD THIS GUIDE HERE