CABN mitigates the Lenders credit risk as result of collateral assets provided borrower, which are highly liquid, asset such as Treasury bills. The Lender can also refinance during the life of a CABN by selling or repoing the assets to a third party (he would, of course, subsequently have to buy the same type of collateral back in order to return it to his repo counterparty at the end of the repo). This right of use therefore mitigates the liquidity risk that the buyer takes by lending to the seller. Because lending through a repo exposes the buyer to lower credit and liquidity risk, repo rates should be lower than unsecured money market.
e-Link Markets will at no time receive cash directly from a Lender and will not conduct investments on behalf of an Lender except the investor signs a waiver that authorises e-Link markets to trade on its behalf. Each Lender is setup on our trading platform and receives login credentials to directly access our trading platform and trade and negotiate amounts, rates and tenor of investment with borrowing counterparties.
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