External commercial borrowings (ECB) is when Commercial loans, buyer’s credit, supplier’s credit and securitized instruments are availed of from non-resident lenders by Indian borrowers.
ECB are used widely in India to facilitate access to foreign money by Indian corporations and PSUs.
Debenture trustee : Redeemable debentures
A redeemable debenture is a written agreement about a loan that must be repaid by a set time.
Redeemable debenture documents generally include lower rates of interest and lengthier time frames for repayment.
Escrow agent : Escrow agreement
An escrow agreement lists the obligations of all the three parties involved and are commonly used in real estate transactions.
The escrow agreement is a binding agreement between the party who makes the promise and the one to whom the promise is made.
Alternative Investment Fund (AIF): Sponsor
Any person or persons who sets up an AIF is the Sponsor of the AIF. The Sponsor of the AIF may or may not be the same as the Manager.
- Should be fit and proper as per SEBI criteria
- Should have the necessary infrastructure and manpower to effectively discharge its activities
- Should not have been refused registration by SEBI earlier
Securitization: Pass Through Certificate
Pass through certificate (PTC) is a high quality debt instrument that represent ownership in a pool of assets and derive monthly principal and interest payments from those assets.
PTC makes a holder entitled to any income earned from the securitized finance products.
The most common types of pass-through certificates in securitization are Asset backed securities.
Securitization: Securitized Debt Instruments
Securitized debt instruments are financial securities that are created by securitizing individual loans (debt).
A special purpose distinct entity desirous of making an offer of securitized debt instruments to the public shall make an application for listing to one or more recognized stock exchanges.
Obtaining a credit rating from not less than two registered credit rating agencies is mandatory for the SPV offering securitized debt instruments to the public.
Direct Assignment: Credit Enhancement
Credit enhancement is a method to improve the debt or creditworthiness of borrower or bond issuer.
Credit enhancement reduces the credit risk associated with debt and takes various measures internal or external to improve the creditworthiness.
It also increases the overall credit rating and helps to obtain better terms for an outstanding debt.
Debenture Trustee Rights And How They Are Appointed
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