Administration is our Expertise

Call US now to get more information!

+41(0)22 566 82 44

Bonds: Maturity and Redemption

by admin. 0 Comments

GetOpenContent.aspx 1 Bonds: Maturity and Redemption

Ai = number of accrued days for the ith, or last, quasi-coupon period within odd period counting forward from last interest date before redemption.
DCi = number of days counted in the ith, or last, quasi-coupon period as delimited by the length of the actual coupon period.
NC = number of quasi-coupon periods that fit in odd period; if this number contains a fraction it will be raised to the next whole number.
NLi = normal length in days of the ith, or last, quasi-coupon period within odd coupon period.

Bonds often are referred to as being short-, medium- or long-term. Generally, a bond that matures in one to three years is referred to as a short-term bond. Medium or intermediate-term bonds generally are those that mature in four to 10 years, and long-term bonds are those with maturities greater than 10 years. Whatever the duration of a bond, the borrower fulfills its debt obligation when the bond reaches its maturity date, and the final interest payment and the original sum you loaned (the principal) are paid to you.

Not all bonds reach maturity, even if you want them to. Callable bonds are common: they allow the issuer to retire a bond before it matures. Call provisions are outlined in the bond’s prospectus (or offering statement or circular) and the indenture – both are documents that explain a bond’s terms and conditions. While firms are not formally required to document all call provision terms on the customer’s confirmation statement, many do so.

Bond maturities usually range from one day up to 30 years or even more. But this maturity date must be seen as the last future date (except if the borrower is in default) on which the investor will receive the principal amount from to the issuer. Depending on redemption features, the real reimbursement date can be very different (much shorter). These redemption features usually give the right to the investors and/or the issuer to advance the maturity date of the bond:

Call

This is a provision that allows or require the issuer to repay the bond before the maturity date. The issuer will ‘call’ his bond if the interest rate index is lower than when he issued the bond. On the investor point of view, it means that the bond will be prepaid if the bond brings him too much interest compared to the current market conditions. If you purchase a bond with a ‘call option’, you have to pay less (get a premium) than without call because if the bond is prepaid, you will reinvest the money at a lower rate.

Put

The put is a provision that gives to right to the investors to require from the issuer to redeem the bond before the maturity date. Investors usually exercise this option when the current market rates are higher so that he can reinvest his money at a higher rate. The put feature is a protection for the investor against an increase of the interest rate on the market and, consequently, should pay more (pay a premium) for a bond with a put than without.

Conversion

Some corporate bonds, known as convertible bonds, contain an option to convert the bond into common stock instead of receiving a cash payment. Convertible bonds contain provisions on how and when the option to convert can be exercised. Convertibles offer a lower coupon rate beacuse they have the stability of a bond while offering the the potential upside of a stock.


Partial Prepayment (Paydown)

This kind of feature is usually seen with mortgage-backed securities. Without entering into details, a mortgage-backed security is anything else but the securitisation of a pool of mortgage loans. In mortgage loans, you have a regular (often monthly or quarterly) payment of principal and also the ability for the borrower the prepay the loan before maturity. Mortgage-backed securities prepay the principal to the investors in parallel the underlying mortgage loans. That’s the reason why mortgage-backed securities are traded on the basis of their ‘average life’.

Mortgage-backed bonds prices are more volatile than fixed rate bonds because the speed of redemption increases when the interests go down (when you have to reinvest at a lower rate) but decreases when interests go up. An increase in interest rates will increase the average life (the real maturity date) of your investment.

Posted in Business in Switzerland Tagged as , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Bond Issue for the Estate of Marvin Gaye

by admin. 0 Comments

midem99 Bond Issue for the Estate of Marvin Gaye
David Pullman, the architect of the much-publicized 1997 “Bowie Bonds” $55 million debt issue, closed a deal with the estate of Marvin Gaye to put together a similar deal backed by royalties from the legendary R&B singer’s recordings. In September 2000 the Pullman Group arranged a bond issue for the estate of Marvin Gaye, whose musical legacy includes “What’s Going On”, “I Heard It Through The Grapevine”, and “Sexual Healing”. The musician’s widow and children shared the profits from the sale of the bonds.

David Pullman, Founder and Chairman of the Pullman Group, (R) LLC, states “Marvin Gaye is pure genius. Because of the deals I do for artists, people always ask me what I listen to. I can tell you I can listen to Marvin Gaye’s music over and over again. This deal is very special to me–especially the songs that weren’t hits are some of my favorites. Marvin Gaye defines what a great album is. It is the albums that are great, not just the hit songs. That is why the Marvin Gaye catalogue sells millions of records per year, year in and year out. I am very excited about working with Marvin Gaye’s wonderful family, Marvin Gaye III, Jan Gaye (mother of Nona and Frankie Gaye), Nona Gaye and Frankie Gaye and their attorney Gary Walters on this deal. Marvin Gaye blazed a trail which not only redefined soul music as a creative force but also created a body of work that is being re-recorded and enjoyed by generation after generation.”

“A few years ago I read an article about what The Pullman Group was doing and wondered if Marvin’s catalogue would be a good one to set up a deal for. Not long after that, we got a phone call that David wanted to meet with the Gaye family,” states Jan Gaye, wife of Marvin Gaye. “Marvin’s catalogue is perfect for a Pullman Bond (TM) securitization. His music is timeless and, generation to generation, kids still learn about Marvin Gaye’s music. It will go on forever.”

Marvin Gaye is credited with reinventing soul music, and his influence and impact started in the early sixties with two R&B smash hits, “Hitch Hike” and “Can I Get A Witness,” classics that were covered two years later by the Rolling Stones. “Dancin’ In The Street,” co-written by Marvin and William Stevenson, was sung by Martha and the Vandellas and hit No. 2 in the U.S. Then, from 1964 to 1967, Marvin became known as the master of make believe with songs like “Ain’t No Mountain High Enough,” “Your Precious Love,” “If I Could Build My Whole World Around You,” “You’re All I Need To Get By.” The biggest hit of the 60′s, “I Heard It Through The Grapevine” recorded and released song by Gladys Knight and The Pips stayed at No. 1 in the US for seven weeks in 1968 as well as reaching No. 1 in England. In the late 60′s, Marvin Gaye created his final work for Motown “What’s Going On,” which is credited for reinventing soul music and reinforcing black music’s impact on social issues. In 1984, Marvin Gaye died tragically, leaving behind one of most unforgettable music legacies in history.

Marvin Gaye has created a musical legacy of over $100 million in music entertainment assets.

A Pullman Bond (TM) music royalty securitization is a financing of artist and publishing royalties, which allows the original owner to keep 100% ownership of the assets that are financed. A securitization is not a sale of such assets and therefore is not a taxable event. The Pullman Group (R) developed these deals to empower artists and creators of entertainment and intellectual property.

The asset-backed securitization deals of David Pullman include the famous $55 million Bowie Bonds (TM) transaction, the $30 million deal with Holland Dozier Holland (Motown Hit Machine), an eight figure deal with R&B greats Ashford & Simpson, a $30 million deal with “Godfather of Soul” James Brown and another eight figure deal for the Isley Brothers. The Pullman Group’s experience includes well over $1 billion in transactions through 1998.

Posted in Business in Switzerland Tagged as , , , , , , , ,

Bowie Bonds

by admin. 0 Comments

17701005020051 Bowie Bonds
It has now been more than ten years since the introduction of the so-called Bowie bonds – regarded as the first ever music royalties future receivable securitisation – which gave rise to IP securitisation as a financing vehicle. In the years since the introduction of the Bowie bonds, a great deal has been written in the business and legal press and in academic journals about securitizing various IP portfolios from copyrights (particularly those associated with music and film) and patents (particularly those associated with pharmaceuticals and high technology) to trademarks and even trade secrets and domain names.

Bowie bonds were one of the first bond issued collateralized by intellectual property. Bowie bonds are asset-backed securities. These bonds are now referred to as Pullman bonds, because David Pullman was the banker that was in charge of setting up the David Bowie bonds. David Pullman convinced Bowie to forfeit his rights to all royalties for a 10-year period. Pullman then used those royalties to create the funding for the bonds. Bowie bonds are a type of bond that were created based on the rights to the albums that David Bowie made before 1990. These bonds were utilized in order to provide David Bowie with a cash payment in return for the rights to his albums.

Bowie bonds were originally issued in 1997 in a deal with the Prudential Insurance Company. The insurance company gave David Bowie an upfront payment of $55 million in return for the rights to the 25 albums that he owned prior to 1990. In a debt offering of this kind, the underlying copyrights would be used to secure the bonds. If the special-purpose vehicle (SPV) defaults on its payment obligations to bondholders, the copyrights are permanently transferred to the bondholders. Until the event of default, of course, the copyright owner would retain the copyrights subject to a security interest held by the bondholders. After the bond obligations are met, the copyright owner holds the copyrights free of the security interest (just as a homeowner that has paid mortgage debt in full owns a home free of the mortgage).The bonds provided the insurance company with a rate of return of 7.9 percent.

Bowie reportedly had a regular cash flow of more than US$1 million per year from ownership rights in the copyrights in much of his music catalogue dating back to the 1960s and to the recording masters. So rather than entering into a new traditional distribution agreement at the expiration of his existing recording and distribution agreement, Pullman devised the Bowie bonds to meet Bowie’s need for upfront cash.

Only limited information about the structure of the transaction is publicly available. The assets Bowie sold to the SPV included the right to certain future royalty payments from 25 pre-1990 albums he recorded (more than 300 copyrights). The SPV issued bonds and Bowie’s record distributor, EMI, provided certain credit enhancements. The bonds received a triple A investment grade rating by Moody’s Investors Services.

The Bowie bonds are not the only example of IP securitisation. In the years since the Bowie Bonds were first introduced, similar bonds backed by the royalties of musicians such as James Brown and the Isley Brothers have also appeared. These bonds have also remained in the institutional market.There also have been securitisations involving film catalogues as well. At least one securitisation involving patents for drugs has been done and publicised. Indeed, quite a few published articles have theorised that the possibilities for securitisations include portfolios of trade secrets, trademarks and domain names as well. However, if there have been such transactions, they have been kept fairly confidential and private.

When considering the intangible nature of intellectual property, perhaps it is not surprising that securitisations in this field have not become everyday, well-publicised transactions. Each type of intellectual property comes with its own peculiar set of complexities and unknown risks that are not common to commercial ventures involving tangible property.

Posted in Business in Switzerland Tagged as , , , , , , , , , , , , ,

Basic Things To Know About Credit Card Debt Consolidation

by admin. 0 Comments

Bad Credit Debt Consolidation 300x225 Basic Things To Know About Credit Card Debt Consolidation

If you are knee-deep in credit card debt and you desperately want to get out of debt, get help from credit card debt consolidation to eliminate your debt as fast as possible. Debts are always overwhelming. Credit card debt consolidation can help you regain the financial stability that you have been suffering from due to your outstanding credit card debts. This article provides you with information you need to know to rid of your credit card debts by consolidating them.

3 Ways To Consolidate Your Debts

If you are in deep trouble with creditor harassment, calling you constantly to pay them off and you need to consider credit card debt consolidation soon. Here are 3 ways to consolidate your credit card debts.

1. 0% interest credit card – Consolidate your all your credit card debts with the help of 0% interest or low interest credit card. After consolidating them, make double payments in order to ensure that you are paying off the principle of your credit card.

2. Approach your bank – You can get help from your bank or some other lender to consolidate your credit card debts. Your bank or lender may agree to offer you a low interest personal loan in order to pay off all the credit card debts. If you have a good credit, securing a low interest rate loan will not be a problem. Else you have to consider a loan with a high interest rate.

3. Home equity loan – You can also consolidate your credit card debts by taking out a low interest home equity loan or line of credit. This will help you take out a loan with a much lower interest rate and thus, affordable for you to pay it off.

3 Benefits of Consolidation

Here are 3 benefits of credit card consolidation.

1. Single monthly payment – With the help of credit consolidation you need to make a single monthly payment. Once you get help from a debt consolidation company you just need to make a single affordable payment each month for your outstanding debts.

2. Lower interest rate – Consolidating your credit cards may offer you a reduction on your interest rate. Thus, lowering your monthly payments and making it more affordable.

3. Debt free quickly – With the help of credit consolidation you may get rid of your debts as soon as possible. Debt consolidation reduces the amount of money you would have paid on your interest rate, simultaneously lowering your monthly payments. Thus assisting you to pay off easily and helping you to eliminate your debts quickly.

Considering credit card debt consolidation will also enable you to repair your credit report easily. With the help of debt consolidation you will gradually reduce your debts and ultimately eradicate all your debts one by one. After eliminating all your debts you may get more free time as you will spend less time worrying about money, debts, planning a budget and paying bills. Getting out of your credit card debt may also help you have more money to put into your future. Thus, helping you lead a stress-free life.

By Emily Jones

Posted in International Business