Conduit (capital market)
As Conduit a is refinancing structure referred to, by means of a in the SPV securities such. B. ABS or CDO or other requirements such. B. Loans or trade receivables from externally valued companies are purchased once or on a revolving basis and refinanced through the issue of interest-bearing securities in internationally accepted currencies . These securities can have a short term ( secured money market paper , ABCP) or a medium term ( medium term notes , MTN).
At the beginning of October 2006, the volume of secured money market paper (ABCP) issued via conduits was 993.1 billion US dollars .
structure
Various programs from different customers are usually bundled in a conduit. For this purpose, each customer pools a pool of the same or similar assets , the history and value of which is examined as part of the structuring. Based on the default history and the associated quality of the assets, a percentage of the total amount of these assets is refinanced by means of money market papers. The remaining discount is referred to as overcollateralization .
The arranging bank also provides credit-enhancing facilities as part of the ABCP program, including in the form of liquidity lines , letters of credit or subordinated loans . The level of these facilities is usually set by the rating agencies in order to achieve the desired rating of the money market paper issued. The facilities are usually drawn if the CPs have short-term sales problems in the money market or if the receivables cannot be collected at short notice .
Conduits of German banks during the subprime crisis in 2007
The subprime crisis in the USA and the sudden illiquidity of ABCP papers and ABS bonds brought the two banks IKB Deutsche Industriebank and Sachsen LB into crises that threatened the existence of the bank in 2007 , as they were no longer able to refinance their purchased receivables in the money market .
Individual evidence
- ↑ The ABCP Paper Trail ( Memento of the original from September 29, 2007 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 222 kB), at www.securitization.net.
- ↑ IKB crisis intensifies. Shaky Mortgage Bonds. Süddeutsche Zeitung , August 11, 2007, accessed on October 3, 2010 .
- ^ Company threatens credit crunch , on www.handelsblatt.com ( Handelsblatt ) from August 20, 2007.
