Liquidating illiquid collateral
Inez Markovich gives readers an overview on the OCC’s recently issued handbook on asset-based lending.She notes that financial institutions pursuing ABL transactions need to keep abreast of the current examination principles and, if necessary, strengthen internal procedures designed to improve the risk management of their ABL portfolios.The OCC acknowledges that ABL is a specialized credit product that provides fully-collateralized credit facilities to borrowers that may not qualify for cash-flow loans due to high leverage structures, inconsistent earnings or insignificant cash flows.
When used in the context of exchange traded products such as stocks, options, or futures, haircut is used interchangeably with the term margin.
The speculative hedge fund Long Term Capital Management (LTCM) saw spectacular losses and required massive bail outs in 1998.
Prior to that it was able to obtain practically next-to-zero haircuts as its trades were considered safe by its lenders.
This unique intensive course covers the key concepts and institutional knowledge necessary to navigate modern fixed income markets successfully.
It is aimed at professionals who are not yet experts in fixed income markets but would gain from a deeper understanding of the world’s largest, most complex financial market.All valuation techniques will be taught in class, but a degree of familiarity with basic discounting would be beneficial.