Capital Funding | Capital & Credit Enhancement | Managed “Buy Sell’ or ‘PPP’
For Monetizing and PPP Trade Entry via SBLC:
This is for a ‘non-recourse loan ’, or ‘non-recourse debt finance agreement’ to fund large-scale infrastructure and commercial property development, in alignment with UNDP SDG 9. [Sustainable Development Goal 9: Infrastructure/Innovation/Industry].
Our Receiving Bank is JP Morgan Chase (New York)
Disbursement Fiduciary: Licensed Hong Kong Fiduciary
Principal Administrator: Based in New Zealand
Sender’s Bank: AA/AAA only
SWIFT MT760 only
Disbursement Target: Target LTV per month to Client/Project Value Matched [Historical target]
LTV/Loan To Value: 70%-90% of Face Value
Minimum First Tranche: $200M
Compliance Norms Applicable
SWIFT MT760 VERBIAGE: Cash Backed Standby Letter of Credit [SBLC]
CLIENT BANK:
WE, [BANK NAME], LOCATED AT [BANK ADDRESS], WITH FULL BANK RESPONSIBILITY
ON BEHALF OF OUR CUSTOMER, [CLIENT NAME/COMPANY NAME], WITH ACCOUNT DETAILS
STATED, CONFIRM THIS CASH BACKED STANDBY LETTER OF CREDIT FOR €200,000,000
[TWO HUNDRED MILLION EURO] IS ASSIGNED IN FAVOUR OF [TRADE TITLE] FOR A
PERIOD OF ONE YEAR AND ONE MONTH.
BENEFICIARY:
ACCOUNT NAME: [TRADE TITLE]
ACCOUNT NUMBER (EURO ) A/C No:
WE CONFIRM WITH FULL BANKING RESPONSIBILITY, THAT THIS CASH-BACKED STANDBY
LETTER OF CREDIT CONFIRMED AND VERIFIED BY SWIFT MT760 BANK TO BANK, IN
FAVOUR OF [TRADE TITLE], AS INSTRUCTED BY OUR CLIENT. THIS STANDBY LETTER
OF CREDIT SERVES AS COLLATERAL TO SECURE ANY LOAN OR CREDIT FACILITY EXTENDED
TO THE BENEFICIARY: [TRADE TITLE] .
WE FURTHER CONFIRM THAT THESE CASH FUNDS IN OUR CLIENTS' ACCOUNTS ARE GOOD,
CLEAN, CLEARED, UNENCUMBERED CASH FUNDS OF NON-CRIMINAL ORIGIN THIS
INSTRUMENT IS ASSIGNABLE, DIVISIBLE, AND TRANSFERABLE.
FOR AND ON BEHALF OF [BANK NAME] , LOCATED AT [BANK ADDRESS]
AUTHORIZED ACCOUNT SIGNATORY: [CLIENT NAME/COMPANY NAME]
Bank Officer (1) Name:
Bank Officer (2) Name:
ONE-OFF TRADE PROGRAM UNTIL PLACED
Program Information
SBLC Trade & Project Finance:
> Trade Receiving Bank: UOB: Kay Hian Pte Limited
> Client Asset Requirement: 200M SBLC euro [cash backed]
> Offer until placed: 4 X LTV paid to client after 20 Banking Days
> Assignment: Instrument is assigned direct to Bank for One Year and One Month, returned to Sender 15 days prior to Expiry date with no lien and no encumbrance.
> Disbursements of Capital and Fees: Licensed Fiduciary [Hong Kong] HKMA regulated.
> All Clients must declare Project Summaries
Procedures:
1. KYC/AML Documents
2. Video Conference for Principals
3. Contract signed
4. SWIFTS: MT799 and MT760 SBLC
5. Disbursements
6. Project Audit Report/Review
This is a one off current bullet based on client sending us 200m SBLC.
Its not available all year. Only until its placed
Our Trade Principal issues debt finance agreements to finance projects. The bottom line is our credit lines exist in UOB: Kay Hian Pte Limited [Singapore] (https://www.utrade.com.sg/home/index.jsp)
Standard 200m cash backed SBLC from any of your esteemed clients triggers this credit line and we provide automated trade finance.
Our Banker is the Head of Capital Markets.
The Finance returns is standard LTV per month to client for 10 months in a year.
Our trade group is MAS/HKMA approved and can place larger trades with the appropriate project summaries, once clients succeed with the simple test trial tranche 200m SBLC.
Once they succeed in the test tranche, we can provide them with higher volume trades.
KNOWING UOB Kay Hian
Backed by the UOB Group, UOB Kay Hian is one of Asia’s largest brokerage firms. Headquartered in Singapore, they are supported by more than 80 branches worldwide including a growing network of offices across Southeast Asia, Greater China, the United Kingdom and North America. Their global footprint and strong international presence have enabled them to feel the pulse of key financial markets and deliver incisive intelligence across industry sectors and asset classes.
With more than a hundred years of history and distinction to their name, they have established themselves as a trusted financial partner to a prestigious client base that comprises institutions, large corporations, high-net-worth individuals and retail investors. Supported by a strong, dedicated research team, their award-winning analysts are in place to impart the deep market knowledge clients need to navigate today’s complex trading environments.
Providing seamless access to multiple products and markets in each country, their sophisticated tools and technology offer investors the capability of trading across a broad range of securities, including stocks, bonds, unit trusts, futures, options, CFDs and forex. As a leading provider of financial services and solutions, UOB Kay Hian is fully committed to serving their clients and community with excellence and integrity.
Procedures:
1. Client provides standard Compliance/AML Risk Assessment/KYC documentation; including client color copy passport, company registration [if applicable] proof of account, bank, bank officer and asset/fund. and/or all relevant RWA [ready willing and able] bank documentation, and standard KYC signatures on the following:
— affidavit requesting information/client information sheet/corporate resolution [if applicable]/letter of intent/
— letter of cease and desist confirmation to all third parties/non-circumvention non-disclosure agreement/source of funds affidavit/letter of /authorization to verify funds/confirmation of bank officer/non-solicitation/exclusivity/.bank officer business card.
2. Principal issues full Finance Agreement to the Client for countersign. Once signed by both parties, the Agreement is legal binding and lodged with all parties of the alliance involved in the transaction. The Agreement will also have full details of receiving bank, receiving bank officer, principal party, authorized licensed fiduciary, and overview of project finance from trade assigned to the Client.
3. Client Bank, sends MT760
4. Principal Bank confirms and verifies swift MT760 cash backed SBLC.
5. Disbursements according to contract
6. Appointed Auditors Report is received confirming Project Funds are placed as assigned in commercial and economic development , job creation focus.
7. Repeat Trade Tranche is cleared to proceed by Party B: Principal Administrator.
For clients with cash funds who want to enter PPP Trade with simple Admin Hold and no SWIFT Transfer… We only need to add our Trade Director as non depleting signatory either on master account or zero balance sub account linked to master account. No funds are ever moved or touched and client can remove signatory at any time. All banks considered. Must have bank officers verify liquid funds in client’s bank account.
Any A/AA/AAA or B/BB/BBB rated Bank with ATM machines/Retail and Commercial Desks, with 100M minimum cash funds, can be placed into trade without swift, via Non Depleting Signatory: simply by adding our Trade Director to the master account.
Client Bank Officer simply verifies funds when checked via ATV.
US Banks, European Banks, Indian Banks, Saudi Arabian Banks, African Banks, South American Banks are acceptable
Overview:
Purpose:
> Structured Finance: This agreement is a ‘non-recourse loan ’ , or ‘non-recourse debt finance agreement’ to fund large scale infrastructure and commercial property development, in alignment with UNDP SDG 9. [Sustainable Development Goal 9: Infrastructure/Innovation/Industry].
> All funds cleared by HKMA/Alpha King Trustee Limited, a licensed fiduciary/asset management/escrow/trustee completing all required AML/Compliance CDD/KYC.
> All Funds [Capital Returns] are acknowledged as Non-recourse Debt Finance or Non-Recourse Loan.
Instrument/Collateral: Cash Funds.
+ Standard Anti-Money Laundering [AML] client assessment regulations apply on all clients.
+ In financial markets, high-frequency trading (HFT) is a type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools.
+ We support groups in alignment with United Nation Development Programs Sustainable Development Goals in particular UNDP SDG 9: Investment in Infrastructure, Industry and Innovation.
+ We support investments at a community level to improve social and economic prosperity, and commercial development and investments in long term infrastructure projects.
This communication is not to be construed as an offer to sell or the solicitation of an offer to purchase any security or invest in a Private Placement Program or Trade Platform. Any such offer or solicitation can be made only by means of an exempt disclosure document and trade platform offering memorandum (which contain a detailed description of risk factors). The offering documents and exempt disclosure documents can only be provided by a licensed and regulated Private Placement Program or Trade Platform to a qualified eligible person or entity. Participation in Private Placement Programs and Trade Platforms is only available to qualified eligible persons. Past performance is not a guarantee of future returns. Applicants are expected to be experienced investors who are familiar with how these investments are done. We DO NOT formally educate or provide any advice as to how one can incorporate this PPP strategy into his / her financial plan.
KNOW MORE ABOUT THE PPP TRADE
Additional Information
In a managed buy/sell trading program, the spread between the buying and selling of bank debentures creates profits by buying low and selling high to a predetermined exit buyer. Because traders cannot use their own money to operate a program, they look for financially qualified investors to provide collateral support for the initial purchase of a new issue asset.
In trading, as we are discussing it here, a trader has locked in the first issuance of some instrument – such as a standby letter of credit, a bank guarantee or a medium term note – while, at the same time, the next, or secondary buyer has been lined up and ready to take the asset at a higher price. However, the trader cannot execute the start trade without having shown new money, such as a line of credit; there is nothing to buy or sell. That is where the investor comes in.
Typically, a credit line makes the trades work, and in order to get the credit line, the trader must show that an investor is proffering his cash or instrument assets to be monetized. In many cases, the investor becomes a joint venture partner in the process of this monetization. The investor money is never really touched – it simply acts as supporting collateral for the trade credit line. As the credit line is generally non-repayable, non-recourse or non-depletion, this means little to no risk to the investor of losing his money. This limits the risk of the underlying collateral being tapped in the event of a default. For additional safety, the bank blocks cash funds in an administrative hold, which prevents credit line depletion during the trade contract, or utilizes an acceptable instrument as the support. In the case of a bank instrument, the trader can rightfully use the instrument to support the credit line.
Because the trader already has the ‘exit’ buyer – the second buyer taking the asset at the predetermined higher price – the profit spread has also been predetermined.
When profits are generated, they are generally split so that the investor shares in the bounty, sometimes up to the full amount of the trade credit line, resulting in an 80 to 100 percent profit to the investor, sometimes more. Each program has different types of profit sharing with the trader, which are negotiated when the program is established with the client.
For illustration purposes, a new issue bank debenture may be purchased at about 40 percent of the face value. So, a €500m face value instrument may cost the trader €200m to buy. The trader uses the trade credit line to make that new issue purchase. Then an exit buyer who was pre-established at the beginning of the program may purchase it at 70 percent (or €350m). The difference is the profit made in the trade, of €150m. That is then used to pay profit to the investor (a shared percentage of the total profit), as well as the trader. When bank debentures trade multiple times during a month, this profit adds up handsomely. This is why an investor can see a profit on his money ranging from 80 to 100 percent of the amount of the trade credit line, and sometimes more (depending on the program).
The challenge for many investors is understanding the minimal risk for loss of principal, particularly if the money owned by the investor stays in his own bank account or is used to issue a cash-backed standby letter of credit. Small cap programs typically require movement of funds to a trader account in order to obtain the trade credit line. Few small cap programs, although there are some, can take under €100m and some offer an insurance policy against loss of principal. Several that we have seen do not offer this. One that we know of, does.
Having understood the principles behind a managed buy/sell, the next question most potential investors ask is, ‘what are the steps needed to engage with such a program?’.
Most investors need a minimum of $100m or €100m – either in cash in a commercial corporate bank account or the face value of a bankable instrument. That number is a little bit deceiving, because you have to factor in the trade credit line being anywhere from 70 to 80 percent of the value of the account. That 70 to 80 percent net must equal at least $100m. So, the real need is for the investor to have about $150m, to account for the deduction with the loan-to-value factored in.
A financially qualified investor, in order to avoid potential solicitation rules, is the one who moves first to establish the relationship. This is done with the submission of a Know Your Customer (KYC) and proof of funds set of documents which indicate the investor’s desire and capacity to enter a program. While the preparation of these documents takes just a little time to complete, it fulfills the solicitation rules allowing the trading organisation to open the conversation and subsequently prepare the trade contract shortly after receipt by the appropriate authorized intake person.
In general, it takes a couple of weeks to arrange the trade commitments and the banks, along with approval from the authorities governing these programs, at which time the trading may proceed at the next opportunity to start.
With the noise of internet brokers misinforming people about these programs, building trust must first be mutual between parties. Without trust, there can be no transaction. Trust is the first thing any investor needs to feel is in place before too much discussion of a program is presented.
The fact is that managed buy/sell programs using bank debentures do exist, however actual providers are few and far between. The supply of these programs is small, and demand far exceeds it. Getting in the way of being connected to something real are usually the internet brokers, who smell money but do not have the relationships or knowledge of how these work, so, the likelihood of success is almost nil. When you have a trusted party to work with, with authentic relationships and compatibility, it is possible to be included in a program. For most investors, this is the mechanism used to fund projects without debt or repayment.
The PPP market is changing and no longer limited to governments and MTNs, and 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 discounted prices by major world banks in the amount of $-billions every day.
These private placements can be structured to meet the specific requirements of investors in terms of maturity and coupon. They can be targeted to retail as well as institutional investors, bear fixed or foreign exchange/interest rate-linked coupon, and can include caps, calls, and other features as required by investors.
A constant theme running through the global non-bank finance market as it has evolved since the 2008 crash, has been private placement and buy/sell programs. Sadly, the whole sector has become tainted as unscrupulous individuals, with no real knowledge of how it operates, have persuaded the unaware to part with significant sums of money on the expectation that they were going to reap outstanding returns. So prevalent did these scams become that the FBI and other agencies actually put out warnings that these programs are, in themselves, a scam. Blame the internet, it’s the cause of much grief in the market generally! It’s probably true to say that less than 1% of what’s on offer on the internet is real. But, nevertheless it is a genuine, private ‘Tier-1’ market place where financial instruments of many types (mostly MTN’s) are transacted by independent traders and trading groups, operating across the world’s to top tier banks.
Clients considering entering this market to make the right decisions look to us for guidance, to find explanations on some of the obscure or unclear aspects of its secure investment opportunities.
All trading programs in the Private Placement arena involve trade with discounted debt notes in some fashion. Further, in order to bypass the legal restrictions, this trading can only be done on a private level. This is the main difference between PPP trading and ‘conventional’ trading, which is highly regulated. This is a Private Placement level business transaction that is free from the usual restrictions present in the securities market. It is based on trusted, long established private relationships and protocols. Conventional trading activity is performed under the ‘open market’ (also known as the ‘spot market’) where discounted instruments are bought and sold with auction-type bids. To participate in such trading, the trader must be in full control of the funds, otherwise he has no means of buying the instruments before reselling them.
However, in addition to the widely recognized open market there is a closed, private market comprising a restricted number of ‘master commitment holders’. These are trusts, foundations and other entities with huge amounts of money that enter contractual agreements with banks to buy a limited number of fresh-cut instruments at a specific price during an allotted period of time. Their job is to resell these instruments, so they contract sub-commitment holders, who in turn contract exit-buyers. This form of pre-planned and contracted buy/sell is known as arbitrage, and can ONLY take place in a private market (the PPP market) with pre-defined prices. Consequently, the traders never need to be in control of the client’s funds. However, no program can start unless there is a sufficient quantity of money backing each transaction. It is at this point that, the client, is needed because the involved banks and commitment holders are not allowed to trade with their own money unless they have reserved enough funds, comprising money that belongs to clients, which is never at risk.
The ‘host’ trading bank is then able to loan money to the trader against your deposit. Typically, this money is loaned at a ratio of 10:1, but during certain conditions it can be as high as 20:1. In other words, if the trader can ‘reserve’ $100 million of client funds, then the bank can loan $1 Billion against it, with which the trader can trade. In all actuality, the bank is giving the trader a line of credit based on how much client funds he controls, since the banks can’t loan leverage money without collateral. Because bankers and financial experts are well aware of the ‘normal’ open market and of so -called ‘MTN programs’, but are closed out of this private market, they find it hard to believe that it exists. Bankers in top-tier, global banks (where this trading takes place) are ignorant that this trading exists within their own institutions because it happens at a level far removed from their own mainstream banking operations.
Private Placement trading safety is based on the fact that the transactions are performed as arbitrage. This means that the instruments will be bought and resold immediately with pre-defined prices. A number of buyers and sellers are contracted, including exit-buyers comprising mostly of large financial institutions, insurance companies, or extremely wealthy individuals. The arbitrage contracts, provision of leverage funds from the banks and all settlements follow long established and rapid processes. The issued instruments are never sold directly to the exit-buyer, but to a chain of market participants. The involved banks are not allowed to directly participate in these transactions, but are still profiting from them indirectly by loaning money with interest to the trader as a line of credit. This is their leverage. Furthermore, the banks profit from the commissions involved in each transaction. The client’s principal does not have to be used for the transactions, as it is only reserved as a compensating balance (‘mirrored’) against the credit line provided by the bank to the trader.
History of Private Placement Programs
In the 1990s, the trading in bank instruments was and is presently a multitrillion dollars industry worldwide. The World’s largest Holding Companies of North American and European Banks are authorized to issue blocks of debt instruments such as medium term notes, debenture instruments, and standby letters of credit at the behest of the United States Treasury for the United States Treasury Trust and Foundations and the United States Federal Reserve. The Instruments issued are backed by a Treasury undertaking. The genesis of this marketplace was the 1944 Bretton Woods Conference of world’s leaders. The principles originally championed as answers to post World War II economic stability are still the impetus for the operation of these transactions today. These transactions started some fifty years ago, have grown and been continuously modified, and as described in this article are Private Placement U.S. Treasury and Federal Reserve investment transactions administered by select Western Banks. A brief history will help to understand the origin of these transactions and how it has remained strong and viable despite the great economic changes the world has experienced over the last half-century
With World War II having come to a close, the leading political and economic authorities of the world met in Bretton Woods, New Hampshire (USA). Their purpose was to formulate a common plan to rebuild the war’s massive devastation and to impose global restraints upon forces which had twice led to world chaos during the first half of the Twentieth Century and left economic collapse in its wake. To accomplish this goal, these leaders sought to empower universally recognized international institutions capable of effectuating and preserving political order and capable of encouraging and facilitating world economic trade and cooperation.
Leading economists around the world advocated the creation of an international banking system that would administer a universally accepted “currency”. It was believed that a centralized global authority, and a standard world currency, with fixed exchange rates between the different currencies of the world, was the formula for stimulating growth and maintaining world economic stability. The Bretton Woods Conference was held on July 1, 1944, with more than 700 participants representing 44 countries coming together and advocating for the establishment of an international banking system. The English economist John Maynard Keynes called for the adoption of a standard currency. However, the political realities of state autonomy have inevitably prevented the adoption of a uniform currency. As an alternative, international leaders have decided to adopt the US dollar as the standard global currency for international trade. It was backed by gold and the most stable currency. This adoption of the US dollar as the standard currency of international trade was the cornerstone that triggered the development of the banking instrument market. The Bretton Woods Conference also gave birth to the United Nations, the World Bank, the International Monetary Fund (IMF) and the Bank for International Settlements (BIS). The World Bank was structured to operate in a manner consistent with traditional commercial banks. It was created to serve as a lender to the poorest and least developed countries. World Bank funding came from the evaluation of the most industrialized countries. Today, it receives deposits from more than 140 member governments and lends to the least developed countries in need of international capital.
In its attempt to further solidify the universal acceptance of the U.S. Dollar as the standard world currency, the Bretton Woods Conference had fixed the price of Gold backing the U.S. Dollar at $35.00 an ounce. During the 1950s and the 1960s the price of gold in the open market had increased to a price nearly ten times that amount. The need to back the U.S. Dollar with gold valued at $35.00 an ounce while simultaneously providing sufficient U.S. Dollars to accommodate the increased needs of the international marketplace created significant stress on the United States Monetary system. The United States did not have enough gold to continue issuing the dollars necessary to continue to support international economic expansion. On August 15, 1971, facing a threatened speculative run on the U.S. gold reserves, President Richard Nixon renounced America’s promise to convert paper dollars into gold upon demand. With this executive proclamation the United States abandoned the gold standard. In the absence of the gold backed standard currency the idea of fixed exchange rates among all currencies of the world became passed, and by 1973 the IMF, the World Bank and the Bank of International Settlements (BIS) had abandoned the idea of fixed exchange rates. Within the territorial limits of the United States the U.S. Federal Reserve exerts influence upon the domestic economic trends by the regulation of domestic bank reserve requirements and the adjustment of the Federal Discount Rate. While these may be internally effective tools, they are inadequate to provide the international control demand in the global marketplace. The United States Treasury expanded the roll of the Federal Reserve System to monitor the International markets separate and apart from domestic duties.
The US Treasury needed to find a solution to continue creating US Dollars, so it created financial instruments, mainly Medium Tern Notes (MTN’s)*, which it sold to major global banks. The US Treasury through the validation of the Federal Reserve issues the largest financial instruments of the issuing banks of the World Bank in US dollars. These transactions are economically important because the banking instruments have such large dollar amounts that the effect of these sales will have a direct impact on the volume of the US dollar in circulation. Once the Federal Reserve cash out the sale of financial instruments in dollars, they can be reintegrated into targeted segments of the global economy in accordance with the US Treasury and policies determined by the G8 countries. The big world banks exchange their financial instruments. Private Placement Programs (PPP’s) are born …But reserved only for banks and governments… * Medium Term Notes are negotiable debt securities with an interest rate. They are issued by governments or companies in international debt markets to finance their medium and long-term capital needs.
This solution is very advantageous economically and financially for everyone, and it’s something magical … we always win upwards or downwards … if the economy of a country is growing, we win in positive speculation, if the economy of a country collapse, the debt is erased … but the US Dollars were created meanwhile … everyone wins … There is so much to gain from this system, that the banks have started to want to use this system to launder their own liquidity, and those of some of their clients obtained more or less in the legality (not respecting oil embargoes, money laundering. …). Remember the file of HSBC a few years ago. Banks will therefore organize, and create “subsidiaries” so-called “trading platforms”. They will offer their large clients to invest in programs through its platforms. The money returns gray and spring white with huge profits validated by the Federal Reserve (FED). But in this case, if there is any doubt about the origin of the funds, the Federal Reserve (FED) validate the transaction only if a part of the profits generated is donated to a humanitarian foundation, or a government project always humanitarian.
Compared to the yield from traditional investments, these programs can deliver a very high yield. 100% (or more) per week is possible. And this is how: Assume a leverage effect of 10:1, meaning the trader is able to back each buy-sell transaction with ten times the amount of money investor has deposited with the program. In other words, you have $10 million but the trader, because of his leveraged loan with the bank, is able to work with $100 million. Assume also the trader is able to complete three buy-sell transactions per week, with a 5% profit from each buy-sell transaction: ” (5% profit/transaction) x (3 transactions/week) = 15% profit/week Assume 10x leverage effect = 150% profit…PER WEEK”
Applicants are expected to be experienced investors who are familiar with how these investments are done. We DO NOT formally educate or provide any advice as to how one can incorporate this PPP strategy into his / her financial plan.