Long Term Note Monetization (LTN)
Instrument & Service Description:
Maturity Period: LTNs generally have maturities of more than 10 years, with some stretching to 30 years or longer, depending on the issuer and the structure of the note.
Interest Payments: Like other debt instruments, LTNs pay interest either at a fixed rate or a floating rate. These interest payments are typically made on a semi-annual or annual basis.
Higher Yield: Due to the longer time horizon and associated risks (such as inflation and interest rate changes), LTNs typically offer higher interest rates compared to short-term and mid-term notes.
4. Risk Factors:
- Interest Rate Risk: Because they have a longer maturity, LTNs are more sensitive to changes in interest rates. If interest rates rise, the value of the LTN may decline in the secondary market.
- Inflation Risk: Over long periods, inflation may erode the purchasing power of the fixed interest payments.
- Credit Risk: The issuer's creditworthiness could change over time, potentially impacting the note's risk and return profile.
Callable Features: Some LTNs have a "callable" feature, which allows the issuer to repay the note before its maturity date, typically after a specified period. This feature gives issuers flexibility to refinance the debt if interest rates decline.
Benefits for Investors
Steady Income: LTNs offer a predictable and stable stream of income through regular interest payments.
Higher Yield: The longer duration typically provides higher interest rates than shorter-term debt securities.
Capital Preservation: For conservative investors, LTNs from highly rated issuers offer a safer way to preserve capital over the long term.
Benefits for Issuers
Long-Term Financing: LTNs provide issuers with a source of capital that does not require frequent refinancing.
Fixed Obligations: With fixed interest rates, issuers know their debt service costs over an extended period, helping with long-term financial planning.
Examples of Long-Term Notes
Government Bonds: U.S. Treasury bonds with maturities of 10 to 30 years are a common example of long-term notes.
Corporate Bonds: Companies may issue long-term bonds to fund long-term investments like new factories, research, or acquisitions.
In summary, Long-Term Notes offer both investors and issuers the ability to lock in financial commitments over an extended period, balancing the higher yields and risks associated with long-duration instruments.
LTN settlement
process is fast, transparent and uses the Swift Delivery process. Swift is a well-established European (Belgium) financial transaction settlement network that was founded in 1973 by group of investors and continues to operate successfully employing over 3500 people today.
This Monetization service is ideal for clients looking to Discount, Monetize, or create an immediate non-recourse loan against an LTN Bond or Note that they own because this monetization method is the cleanest, fastest and cheapest way to do it!
The Monetization process allows the client to retain ownership of their LTN while at the same time creating a Non-Recourse Loan against the LTN each year.
Monetization LTV:
15% to 35% Non Recourse
Estimated Completion Time
7 to 14 Days after all documents are signed and verified or 3 Days After Instrument Euroclear Delivery.
Examples
The LTN is listed on Euroclear with a Value of Maturity: $100,000,000,000
The LTN is Monetized Non Recourse at 32% LTV being: $32,000,000,000
The Client is paid the USD equivalent of $32,000,000,000
Step 1
After Setting up Client Line of Credit Account for a Non-Recourse Loan, and execution of the monetization contract by both parties the Client will instruct his Issuing bank to assign the LTN using the swft Delivery to the bank coordinates provided by the Monetizer.
Step 3
Upon receipt and confirmation of the Swift assignment and delivery, the Monetizer will within maximum three (3) banking days grant a Non Recourse Loan for the LTV as agreed from its nominated bank to the Client.
Step 2
The Clients Issuing Banker shall immediately Respond via Swift 799 a certified execution receipt of the LTN delivery to the Monetizer
Step 4:
The Monetizer agrees to return the LTN unencumbered fifteen (15) calendar days before the 1 year anniversary of the signed contract between the parties.
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