DOCSLIB.ORG

Debenture Pricing Manual

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Debenture Pricing Manual DEBENTURE PRICING MANUAL 31/03/2020 PUBLIC INFORMATION INFORMAÇÃO PÚBLICA – PUBLIC INFORMATION Debenture Pricing Manual CONTENT INTRODUCTION ................................................................................................ 3 1 GLOSSARY OF VARIABLES ...................................................................... 4 2 PRICING MODELS FOR FIXED INCOME CONTRACTS ............................ 7 3 PRICED DEBENTURES ............................................................................. 10 4 PROCEDURES ADOPTED DUE TO CHANGE IN DEBENTURE CHARACTERISTICS .................................................................................. 12 ANNEX – METHODOLOGIES ......................................................................... 14 1 DEBENTURES SPREAD CURVE .............................................................. 14 2 SYSTEMATIC BIAS CORRECTION MODEL FOR TRADED DEBENTURES ........................................................................................... 22 CHANGE LOG ................................................................................................. 23 2 PUBLIC INFORMATION Debenture Pricing Manual INTRODUCTION This manual presents the calculation methodologies used to generate debentures reference prices and rates disclosed by B3 in the Private Fixed Income segment. Also listed are the characteristics that must be observed in a given bond for it to be eligible for pricing by one of the methods set forth herein. Section 1 defines the variables used in pricing models. Section 2 presents the pricing model for the categories in which the debentures are grouped. Section 3 provides the economic and financial indices covered by the pricing models and the exceptions. Lastly, section 4 describes the procedures adopted due to changes in debenture characteristics. The Annex shows the methodologies for calculating the parameters used for pricing. The calculations presented throughout this document are performed without applying any truncation or rounding. Only the end product of the calculation, the one sent to users, is rounded to the sixth decimal place. 3 PUBLIC INFORMATION Debenture Pricing Manual 1 GLOSSARY OF VARIABLES Debentures contracts are divided into four groups: (i) Fixed Rate, (ii) Floating Rate with Percentage Spread, (iii) Floating Rate with Multiplicative Spread and (iv) Indexed. The methodology used to calculate the reference price and rate is specific to each group. However, the variables and concepts are common to all. This section presents a glossary of the variables used in fixed income contract pricing methodologies and their descriptions. 풕 Mark-to-market date. 풕−ퟏ Business day prior to mark-to-market date. 풕ퟎ Bond yield start date. 푨푴푻%(풆풊) Par Value percentage to be paid on payment flow dates (풆풊). %푰풏풄(풆풊) Percentage of the future value of the i-th interest rate flow to be incorporated into the issuance par value (VNE). 풆풊 Payment flow dates, 0 ≤ ≤ 푛; dates on which the issuer must pay the investor. In the notation used in this document, 푒푖 is the i-th payment flow date; 푒0 is assumed to be the bond yield start date (푡0) and 푒푛 is the last payment date. The set of all these dates will be named 퐸 and the subset will be named 퐸푡, where 푒푖 ≥ 푡. 푵풕 Value in points on the 풕 calculation date of the index correcting the bond issuance par value. 푵풕ퟎ Value in points on the 풕ퟎ bond calculation start date of the index correcting the bond issuance par value. 풓풆풊 Interest rate expressed in % per annum (p.a.) that pays the 푒푖 interest rate event. All rates contained in the models presented are expressed in % p.a., on the basis of 252 4 PUBLIC INFORMATION Debenture Pricing Manual business days (d.u.) capitalized under the compound interest regime. If the interest rates of any bond differ from those mentioned above, they shall be converted to an equivalent rate so that the calculations made are coincident with the characteristics of the bond’s issuance. 푽푵푬 Bond issuance par value. 푽푵푹 Remaining par value, i.e., the amount of the issuance par value that the issuer still owes the investor, minus amortizations already made. 푉푁푅(푡) = (푉푁퐸 + ∑ 푭(풆풌) ∗ (1 − %퐼푛푐(푒푘)) − ∑ 퐴푀푇(푒푘) 푒푘:푒푘∈피푡 푒푘:푒푘≤푡 푻푼 Single contract discount rate obtained through the bisection method. The variables below are defined only in 퐸푡, that is, in payment flows that occur on dates where 푒푖 ≥ 푡. 푨푴푻(풆풊) Amortization Cash Value. In the event of amortization on the issuance par value: 퐴푀푇(푒푖) = 푉푁퐸 + ∑ 푭(풆풊) ∗ (1 − %퐼푛푐(푒푖))) ⋅ 퐴푀푇%(푒푖) 푒푘:푒푘∈피푡 In the event of amortization on the remaining par value: 퐴푀푇(푒푖) = 푉푁푅 + ∑ 푭(풆풊) ∗ (1 − %퐼푛푐(푒푖))) ⋅ 퐴푀푇%(푒푖) 푒푘:푒푘∈피푡 푫푼(풆풊) Business days count between 푡 and 푒푖. 푫푼푪풖풑풐풎(풆풊) Business days count between 푒푖−1 and 푒푖 Payment Flows. 5 PUBLIC INFORMATION Debenture Pricing Manual 푫풖풓(풕) Fixed income contract duration. ∑푒 :푒 ∈피 퐷푈(푒푘) ⋅ 푃(푒푘) 1 퐷푢푟(푡) = 푘 푘 푡 ⋅ 푃푈 252 푭(풆풊) Cash value of the interest rate event to be paid on the 푒푖 date. 푰(풕) Premiums released and not paid by the issuer. 풑 Percentage premium, which may be a premium or a discount, applied to the debenture credit spread. The premium is differentiated by debenture and allows incorporating other factors into the price other than the credit profile. 푷(풆풊) Present value related to the total to be paid at the 퐹(푒푖) flow. 푷푼(풕) Present value of contract, reference price (PU = Unit Price). 푃푈(푡) = 퐼(푡) + ∑ 푃(푒푘) 푒푘:푒푘∈피푡 푹(풆풊) Discount interest rate for the 푒푖 maturity calculated through exponential interpolation. This rate depends on the contract index and will be detailed in the following sections. 푺(풆풊) Credit spread for the 푒푖 maturity calculated through exponential interpolation. The spread is obtained from the credit spread curves for the debenture credit profile. Each fixed income contract is assigned a credit profile and used to obtain the corresponding credit spread curve. The characteristics and payment flows of the debentures used in pricing are those defined in the public issuance deeds of debentures and are reflected in B3's securities registration system. 6 PUBLIC INFORMATION Debenture Pricing Manual Below, we present the calculation specificities of different debenture groups, using the notation presented herein. 2 PRICING MODELS FOR FIXED INCOME CONTRACTS The reference price for liquid debentures, i.e., those that have a minimum trading frequency over a time window, is the average day's trading prices that meet the maximum dispersion criterion weighted by quantity. For other debentures, the price is determined via the models described below. The types of fixed income contracts differ depending on the financial index used for indexation, which is reflected in the methodology used for pricing the bond. Fixed income contracts are classified as fixed rate, floating rate (percentage or multiplicative spread) and indexed. The following are formulas for pricing bonds. 2.1 Fixed rate contracts Are contracts characterized for having their interest rate (푟) and yield known upon issuance. 퐷푈퐶푢푝표푚(푒 )⁄252 ( ) 푎푐푐퐹 푒푖 = (1 + 푟푒) − 1 퐹(푒푖) = 푉푁푅(푒푖−1) ∗ 푎푐푐퐹(푒푖) 퐹(푒푖) ∗ (1 − %퐼푛푐(푒푖)) + 퐴푀푇(푒푖) 푃(푒푖) = 퐷푈(푒)⁄252 [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 퐷푈(푒)⁄252 퐷푈(푒)⁄252 [(1 + 푇푈)] = [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 7 PUBLIC INFORMATION Debenture Pricing Manual 2.2 Floating rate contracts Their indexation is based on an index (퐼푛푑푐(푡)) with an annualized rate on a compound interest basis of 252 business days, such as the CDI (Interbank Certificate of Deposits), which is used for most contracts. Floating rate contracts may be of two types: percentage spread and multiplicative spread. 2.2.1 Floating rate contracts with percentage spread Percentage spread contracts are traded as a percentage (휙푒) of the index interest rate defined at the issuance of the contract. If 푒푖 is the first event immediately following the 푡 mark-to-market date, then: 퐷푈(푡,푒 ) 1⁄ ( ) ( ) 252 푎푐푐퐹 푒푖 = 푓푎푡표푟퐼푛푑푐 ∗ {[(1 + 푅 푒푖 ) − 1] ∗ 휙푒 + 1} 푡 1 ( ) ⁄252 푓푎푡표푟퐼푛푑푐 = ∏ [ 1 + 퐼푛푑푐푘 − 1] ∗ 휙푒 + 1 푘=푒−1 Otherwise: 퐷푈(푒 ) 1 ( ) ( ) 252 푎푐푐퐹 푒푖 = [1 + (((1 + 푅 푒푖 ) ) − 1) ∗ 휙푒] 푎푐푐퐹(푒푖) 퐹(푒푖) = 푉푁푅(푒푖−1) ∗ [ − 1] 푎푐푐퐹(푒푖−1) 퐹(푒푖) ∗ (1 − %퐼푛푐(푒푖)) + 퐴푀푇(푒푖) 푃(푒푖) = 퐷푈(푒)⁄252 [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 퐷푈 1 252 [[(1 + 푅(푒푖)) − 1] ∗ (1 + 푇푈)] 퐷푈(푒)⁄252 = [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 8 PUBLIC INFORMATION Debenture Pricing Manual 2.2.2 Floating rate contracts with multiplicative spread Flow payments of floating rate contracts with multiplicative spread consider the composition of the contract coupon rate (r) with the index interest rate for the calculation of the contract’s yield. Cash flow discount considers the composition of the market credit spread for the contract and the discount rate (푅(푒푖)) for the index (퐼푛푑푐). If 푒푖 is the first event immediately following the 푡 mark-to-market date, then: 퐷푈(푡,푒) 퐷푈(푒) ( ) ( ) 252 252 푎푐푐퐹 푒푖 = 푓푎푡표푟퐼푛푑푐 ∗ (1 + 푅 푒푖 ) ∗ (1 + 푟푒) 푡 1⁄ 푓푎푡표푟퐼푛푑푐 = ∏ (1 + 퐼푛푑푐푘) 252 푘=푒−1 Otherwise: 퐷푈(푒) ( ) ( ) 252 푎푐푐퐹 푒푖 = [(1 + 푅 푒푖 )(1 + 푟푒)] 푎푐푐퐹(푒푖) 퐹(푒푖) = 푉푁푅(푒푖−1) ∗ [ − 1] 푎푐푐퐹(푒푖−1) 퐹(푒푖) ∗ (1 − %%퐼푛푐(푒푖)) + 퐴푀푇(푒푖) 푃(푒푖) = 퐷푈(푒)⁄252 [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 퐷푈 퐷푈(푒 )⁄252 252 [(1 + 푅(푒푖)) ∗ (1 + 푇푈)] = [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 2.3 Indexed contracts Indexed bonds update their issuance par value (VNE) according to the variation of a given 푵 index, which is defined at the contract’s issuance, such as the IGP- M (General Market Price Index) or the IPCA (Extended Consumer Price Index). 9 PUBLIC INFORMATION Debenture Pricing Manual The contract coupon interest rate (푟푒) is then applied over the updated par value to determine the event’s cash value to be paid by the issuer. 퐷푈퐶푢푝표푚(푒 )⁄252 ( ) 푎푐푐퐹 푒푖 = (1 + 푟푒) − 1 푁푡 퐹(푒푖) = 푉푁푅(푒푖−1) ∗∗ ∗ 푎푐푐퐹(푒푖) 푁푡0 푁푡 퐹(푒푖) ∗ (1 − %%퐼푛푐(푒푖) + 퐴푀푇(푒푖) ∗ 푁푡0 푃(푒푖) = 퐷푈(푒)⁄252 [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 퐷푈(푒)⁄252 퐷푈(푒)⁄252 [(1 + 푇푈)] = [(1 + 푅(푒푖)) ∗ (1 + 푆(푒푖)) ∗ (1 + 푝)] 3 PRICED DEBENTURES Public issuances performed through the Brazilian Securities & Exchange Commission (CVM) Normative Instructions No.
Load more

Recommended publications
  • Corporate Bonds and Debentures
    Corporate Bonds and Debentures FCS Vinita Nair Vinod Kothari Company Kolkata: New Delhi: Mumbai: 1006-1009, Krishna A-467, First Floor, 403-406, Shreyas Chambers 224 AJC Bose Road Defence Colony, 175, D N Road, Fort Kolkata – 700 017 New Delhi-110024 Mumbai Phone: 033 2281 3742/7715 Phone: 011 41315340 Phone: 022 2261 4021/ 6237 0959 Email: [email protected] Email: [email protected] Email: [email protected] Website: www.vinodkothari.com 1 Copyright & Disclaimer . This presentation is only for academic purposes; this is not intended to be a professional advice or opinion. Anyone relying on this does so at one’s own discretion. Please do consult your professional consultant for any matter covered by this presentation. The contents of the presentation are intended solely for the use of the client to whom the same is marked by us. No circulation, publication, or unauthorised use of the presentation in any form is allowed, except with our prior written permission. No part of this presentation is intended to be solicitation of professional assignment. 2 About Us Vinod Kothari and Company, company secretaries, is a firm with over 30 years of vintage Based out of Kolkata, New Delhi & Mumbai We are a team of qualified company secretaries, chartered accountants, lawyers and managers. Our Organization’s Credo: Focus on capabilities; opportunities follow 3 Law & Practice relating to Corporate Bonds & Debentures 4 The book can be ordered by clicking here Outline . Introduction to Debentures . State of Indian Bond Market . Comparison of debentures with other forms of borrowings/securities . Types of Debentures . Modes of Issuance & Regulatory Framework .
    [Show full text]
  • Divest Invest February 2018 (Compressed)
    Divest from the past, invest in the future. www.divestinvest.org Disclaimer: Divest Invest assumes no legal or financial responsibility for the practices, products, or services of any businesses listed. The funds listed are examples, not recommendations. Please read all materials carefully prior to investing. This presentation will cover: • What the Paris Agreement means for investors 3 • What is Divest Invest 7 • Divest Invest is the prudent financial choice 12 • Divest Invest fulfills fiduciary duty 21 • Fossil free investing: from niche to mainstream 27 • Divest Invest options for every asset class 31 2 What the Paris Agreement means for investors WHAT THE PARIS AGREEMENT MEANS FOR INVESTORS Under the Paris Agreement, world governments commit to keep global temperature rise to well below 2°C and to pursue efforts to limit it to 1.5°C. To achieve this, up to 80% of fossil fuel reserves can’t be burned. They are stranded assets whose economic value won’t be realized. Investors are sitting on a carbon bubble. Climate risks, including stranded assets, pose a material threat to investor portfolios now, say a growing chorus of financial regulators, asset managers, analysts, policymakers and … oil companies: 4 WHAT THE PARIS AGREEMENT MEANS FOR INVESTORS The Paris Agreement Mark Carney Warns Investors Face signals to markets that ‘Huge’ Climate Change Losses (9/29/15) the global clean energy transition is underway and accelerating. Shell CEO Ben Van Beurden Has Seen Prudent investors are The Future—And It’s Several Shades heeding the call.
    [Show full text]
  • USDA Single Family Housing Guaranteed Loan Program
    USDA Single Family Housing Guaranteed Loan Program No down payment loans for rural borrowers with incomes below 115 percent of area median income as defined by USDA BACKGROUND AND PURPOSE BORROWER CRITERIA The U.S. Department of Agriculture’s (USDA) Income limits: This program is limited to borrowers Single Family Housing Guaranteed Loan Program with incomes up to 115 percent of AMI (as defined by (Guaranteed Loan Program) is designed to serve eli- USDA). Approximately 30 percent of Guaranteed Loans gible rural residents with incomes below 115 percent are made to families with incomes below 80 percent of of area median income or AMI (see USDA definition in AMI. An applicant must have dependable income that overview) who are unable to obtain adequate hous- is adequate to support the mortgage. ing through conventional financing. Guaranteed Loans Credit: Borrowers must have reasonable credit his- are originated, underwritten, and closed by a USDA tories and an income that is dependable enough to approved private sector or commercial lender. The support the loans but be unable to obtain reasonable Rural Housing Service (RHS) guarantees the loan at credit from another source. 100 percent of the loss for the first 35 percent of the original loan and 85 percent of the loss on the remain- First-time homebuyers: If funding levels are limited ing 65 percent. The program is entirely supported by near the end of a fiscal year, applications are prioritized the upfront and annual guarantee fees collected at the to accommodate first-time homebuyers. time of loan origination. Occupancy and ownership of other properties: The dwelling purchased with a Guaranteed Loan must be PROGRAM NAME Single Family Housing Guaranteed Loan Program AGENCY U.S.
    [Show full text]
  • How to Find the Best Credit Card for You
    How to find the best credit card for you Why should you shop around? Comparing offers before applying for a credit card helps you find the right card for your needs, and helps make sure you’re not paying higher fees or interest rates than you have to. Consider two credit cards: One carries an 18 percent interest rate, the other 15 percent. If you owed $3,000 on each and could only afford to pay $100 per month, it would cost more and take longer 1. Decide how you plan to pay off the higher-rate card. to use the card The table below shows examples of what it might You may plan to pay off your take to pay off a $3,000 credit card balance, paying balance every month to avoid $100 per month, at two different interest rates. interest charges. But the reality is, many credit card holders don’t. If you already have a credit card, let APR Interest Months history be your guide. If you have carried balances in the past, or think 18% = $1,015 41 you are likely to do so, consider 15% = $783 38 credit cards that have the lowest interest rates. These cards typically do not offer rewards and do not The higher-rate card would cost you an extra charge an annual fee. $232. If you pay only the minimum payment every month, it would cost you even more. If you have consistently paid off your balance every month, then you So, not shopping around could be more expensive may want to focus more on fees and than you think.
    [Show full text]
  • Single Family Home Loan Guarantees
    Together, America Prospers Single Family Home Loan Guarantees What does this Who may apply for this program? What are applicant qualifications? Applicants must: • Income. Non-Self-Employed: program do? One-year history required. • Have a household income that does not exceed 115% of median Self-Employed and Seasonal: This no downpayment, household income.* Two-year history required. 100% financing program assists • Agree to occupy the dwelling as • Assets. No downpayment or approved lenders in providing their primary residence. reserves required. low- and moderate-income • Be a U.S. citizen, U.S. non-citizen • Credit. Must demonstrate a households the opportunity to national, or Qualified Alien. willingness and ability to repay debts. No set score requirement. • Be unable to obtain conventional own adequate, modest, decent, Alternative credit allowable for those financing with no private mortgage safe and sanitary dwellings as with no traditional credit. insurance (PMI). their primary residence in eligible • Monthly housing payment. Total • Not be suspended or debarred from payment (principal, interest, taxes, rural areas. participation in federal programs. insurance, HOA dues, RD annual fee) typically should not exceed Eligible applicants may purchase What properties are eligible? 29% of gross monthly income. existing homes (which may • Must be located within an eligible • All monthly debt payments. All rural area.* include costs to rehabilitate, payments included on credit report, • Must be a single-family dwelling including proposed new mortgage improve or relocate the dwelling) (may include detached, attached, payment, typically should not exceed or build new. PUD, condo, modular, and 41% of gross monthly income. manufactured). Student loan payments. Fixed USDA provides a loan note • Must meet HUD 4000.1 payment: use actual payment or 1% of loan balance.
    [Show full text]
  • Money Talks, Banks Are Talking: Dakota Access Pipeline Finance Aftermath
    UCLA The Indigenous Peoples’ Journal of Law, Culture & Resistance Title Money Talks, Banks are Talking: Dakota Access Pipeline Finance Aftermath Permalink https://escholarship.org/uc/item/1043285c Journal The Indigenous Peoples’ Journal of Law, Culture & Resistance, 6(1) ISSN 2575-4270 Authors Cook, Michelle MacMillan, Hugh Publication Date 2020 DOI 10.5070/P661051237 eScholarship.org Powered by the California Digital Library University of California MONEY TALKS, BANKS ARE TALKING: Dakota Access Pipeline Finance Aftermath Michelle Cook* and Hugh MacMillan+ Abstract This Article provides a Dakota Access Pipeline (DAPL) finance and divestment campaign retrospective. The Article explains: 1) how DAPL was financed, highlighting the dynamic in which banks take fees for the privilege of financing and refinancing pipeline debt; and 2) how joint venture ownership structures and corporate finance arrangements buffered against efforts to hold DAPL banks accountable. At the same time, many of the same banks finance gun industry and prison industry growth, alongside increased police militarization. Although, intersec- tional visibility of these financial ties is a start, victims of the financial industry lack enforceable corporate accountability mechanisms for seek- ing redress. DAPL banks managed to deflect divestment pressure and avoid meaningful remedial actions. These observations point to the need for systemic changes in corporate accountability mechanisms but also to reclaim and reimagine a world outside of capital, of future self-de- termined
    [Show full text]
  • Interest Rates, Interest Charges, and Fees – Platinum Card Interest Rates and Interest Charges Annual Percentage Rate 14.99% to 22.99%, Based on Your Creditworthiness
    Interest Rates, Interest Charges, and Fees – Platinum Card Interest Rates and Interest Charges Annual Percentage Rate 14.99% to 22.99%, based on your creditworthiness. (APR) for Purchases This APR will vary with the market based on the Prime Rate. APR for Balance Transfers 0.00% Introductory APR for the first fifteen months. After that, your APR will be 14.99% to 22.99%, based on your creditworthiness. This APR will vary with the market based on the Prime Rate. APR for Cash Advances 24.99% This APR will vary with the market based on the Prime Rate. Penalty APR and When it None Applies Paying Interest Your due date is at least 25 days after the close of each billing cycle. We will not charge you any interest on purchases if you pay your entire balance by the due date each month. We will begin charging interest on cash advances and balance transfers on the transaction date. Minimum Interest Charge If you are charged interest, the charge will be no less than $1.00. For Credit Card Tips from To learn more about factors to consider when applying for or using a credit card, the Consumer Financial visit the website of the Consumer Financial Protection Bureau at Protection Bureau http://www.consumerfinance.gov/learnmore/. Fees Annual Fee None Transaction Fees • Balance Transfer Either $10 or 4% of the amount of each transfer, whichever is greater. • Cash Advance Either $10 or 4% of the amount of each cash advance, whichever is greater. • Foreign Transaction 3% of the U.S. Dollar amount of each such transaction.
    [Show full text]
  • Over 100 Global Financial Institutions Are Exiting Coal, with More to Come Every Two Weeks a Bank, Insurer Or Lender Announces New Restrictions on Coal
    Tim Buckley 1 Director of Energy Finance Studies, Australasia 27 February 2019 Over 100 Global Financial Institutions Are Exiting Coal, With More to Come Every Two Weeks a Bank, Insurer or Lender Announces New Restrictions on Coal Executive Summary Today, over 100 globally significant financial institutions have divested from thermal coal, including 40% of the top 40 global banks and 20 globally significant insurers. Momentum is building. Since January 2018, a bank or insurer announced their divestment from coal mining and/or coal-fired power plants Global capital is fleeing every month, and a financial institution the coal sector. who had previously announced a divestment/exclusion policy tightened This is no passing fad. up their policy to remove loopholes, every two weeks. In total, 34 coal divestment/restriction policy announcements have been made by globally significant financial institutions since the start of 2018. In the first nine weeks of 2019, there have been five new announcements of banks and insurers divesting from coal. Global capital is fleeing the thermal coal sector. This is no passing fad. Since 2013 more than 100 global financial institutions have made increasingly tight divestment/exclusion policies around thermal coal. When the World Bank Group moved to exit coal in 2013, the ball started rolling. Following, Axa and Allianz become the first global insurers to restrict coal insurance and investment respectively in 2015, and their policies have subsequently been materially enhanced. Next, some 35 export credit agencies (ECA) released a joint statement agreeing to new rules restricting coal power lending. In the same year, the China-led Asian Infrastructure Investment Bank trumpeted its global green credentials with the Chairman confirming the Bank was in practice ruling out finance for coal-fired power plants.
    [Show full text]
  • New Credit Card Rules
    WHAT YOU NEED TO KNOW: New Credit Card Rules The Federal Reserve’s new rules for credit card companies mean new credit card protections for you. Here are some key changes you should expect from your credit card company beginning on February 22, 2010. What your credit card company has to tell you When they plan to increase your rate or other fees. Your credit card company must send you a notice 45 days before they can increase your interest rate; change certain fees (such as annual fees, cash advance fees, and late fees) that ap- ply to your account; or make other signifi cant changes to the terms of your card. If your credit card company is going to make changes to the terms of your card, it must give you the option to cancel the card before certain fee increases take effect. If you take that option, however, your credit card company may close your account and increase your monthly payment, subject to certain limitations. For example, they can require you to pay the balance off in fi ve years, or they can double the percentage of your balance used to calculate your minimum payment (which will result in faster repayment than under the terms of your account). The company does not have to send you a 45-day advance notice if you have a variable interest rate tied to an index; if the index goes up, the company does not have to provide notice before your rate goes up; your introductory rate expires and reverts to the previously disclosed “go-to” rate; your rate increases because you are in a workout agreement and you haven’t made your payments as agreed.
    [Show full text]
  • Pension Obligation Debenture, 2021 Series A
    Attachment B No. 2021-1 $_______ COUNTY OF ORANGE PENSION OBLIGATION DEBENTURE, 2021 SERIES A The County of Orange (the “County”), a political subdivision of the State of California, acknowledges itself indebted, and for value received hereby promises to pay, to the Orange County Employees Retirement System (the “System”), a retirement system existing under the County Employees Retirement Law of 1937 of the State of California (the “Act”), or assigns (the “Holder”), the sum of _____________Dollars ($________), payable in the amounts and on the dates set forth in Schedule I. Payment shall be made at such address as shall have been agreed upon by the Holder hereof and the County. This Debenture is a duly authorized debenture of the County designated its “Pension Obligation Debenture, 2021 Series A” (the “Debenture”) issued under and in full compliance with the Constitution and statutes of the State of California, particularly the Act, and under and pursuant to Resolutions adopted by the Board of Supervisors of the County on October 31, 2006 and December 15, 2020 (collectively, the “Resolution”). This Debenture and payments hereunder are subject to the terms and conditions of the Resolution, copies of which are on file at the office of the Clerk of the Board of Supervisors of the County, and reference to the Resolution and any and all supplements thereto and modifications and amendments thereof and to the Act is made for a complete statement of such terms and conditions. THIS DEBENTURE MAY BE PREPAID AT THE OPTION OF THE COUNTY IN WHOLE ON OR BEFORE JANUARY 15, 2021, AT A PREPAYMENT AMOUNT OF $_______.
    [Show full text]
  • Finance and Growth: When Credit Helps, and When It Hinders
    Session “Socially Useful Financial Systems” Bezemer – ‘When Credit Helps, and When it Hinders’ Finance and Growth: When Credit Helps, and When it Hinders Dirk J Bezemer, University Groningen ([email protected] ) EXTENDED SUMMARY The financial sector can support growth but it can also cause crisis. The present crisis has exposed gaps in economists’ understanding of this dual potential. This paper grounds an alternative approach in the credit nature of money, and in an older distinction between credit flows that grow the economy of goods and services (the GDP), and credit that inflates markets for financial assets and property. This increases the debt-to-GDP ratio and can be a helpful catalyst of the real sector. But if it overshoots, it leads to bloated financial markets and the pursuit of capital gains rather than profit, with rising costs due to high asset values, rising inequality, falling fixed capital formation, rising uncertainty, and fraud and corruption. Unfortunately, overshooting is built into the system due to the nature of money, banking and compound interest. That is why financial deregulation leads to credit booms and busts. A return to financially sustainable growth in the longer term requires a shrinking of the mortgage, consumer credit and nonbank financial sector which is a creditor to the real sector, and absorbs a continuing flow of liquidity in interest payment and financial fees that would otherwise be effective demand for goods and services, supporting economic growth. Financial deregulation has allowed the US ‘FIRE’ sector to grow to about three times the size it had in the 1980s and so its claims on the real sector are three times larger than a quarter century ago.
    [Show full text]
  • Guaranteed Rural Housing Loans (Section 502) January 2004
    Guaranteed Rural Housing Loans (Section 502) January 2004 The Rural Housing Service (RHS) is a part of PROGRAM BASICS Rural Development (RD) in the U.S. The Section 502 Guaranteed Rural Housing Loan Department of Agriculture (USDA). It operates Program is designed to serve rural residents who a broad range of programs that were formerly have a steady, low or modest income, and yet are administered by the Farmers Home unable to obtain adequate housing through Administration to support affordable housing conventional financing. These loans enable low- and community development in rural areas. and moderate-income rural residents to acquire RHS both provides direct loans (made and modestly priced housing for their own use as a serviced by USDA staff) and also residence through the purchase of a new or guarantees loans for mortgages extended and existing dwelling or the purchase of a new manufactured home. In this variation of the Section serviced by others. 502 program, RHS does not make a loan directly to an eligible borrower, but guarantees a loan made The RHS National Office is located in by a commercial lender. lender. This guarantee Washington, D.C., and is responsible for substantially reduces the risk for lenders, thus setting policy, developing regulations, and encouraging them to make loans to rural residents performing oversight. RHS employs a central who have only modest incomes and little collateral. collection and servicing center in St. Louis, Mo. and a computerized system called DLOS ELIGIBLE ACTIVITIES for Section 502 direct and Section 504 loans. In the field, RHS operations are carried out An eligible applicant must have an adequate and through the USDA’s RD offices.
    [Show full text]