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Benefits to
issuers/land owners/developers (Land Bonds):
 | High Leverage.
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| Excess cash funding after
total costs of investment before interests.
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| Profit sharing ratio: 51%
or higher of the total profit generated from the sale of the land.
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Benefits to
issuers/developers (Property Bonds):
| The total value of bonds issued usually covers
the total costs of investment including land and development costs with an excess cash.
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| The
remaining controlling interest of 51% or higher represents the EDITBA margin of the
issuer/developer before interest earnings on a compound basis.
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| Issuer/developer
will bear zero risk in the cash flow in the investment of the respective property
development.
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| High
leverage of the respective investment can be achieved as per the par value of the total
outstanding bonds issued due to maintenance of the controlling interests by the issuers.
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| The
ultimate net leverage of the respective investment will remain at a high level after all
interest payments, loan repayments and the predetermined percentage of profit sharing are
paid to bondholders.
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Benefits to
issuers/ banks/property developers (Mortgage Bonds):
| A
stable interest spread between the actual lending rates of the mortgage loan and the
interest payment rates payable to bondholders contributes solid annual earnings to the
issuer over the lifetime of the bond.
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| The
accrued interest spreads over the lifetime are added to the face value of the bond as
premiums at the time of issuing or it will become payable to the issuer upon receiving
scheduled monthly interest payments from the borrowers of the mortgage loans throughout
the life of the bond.
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| An
effective self-regulatory tool for banks and financial institutions to enhance their
debt/equity or loan/asset ratios.
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| The outright sales of
mortgage loan portfolios by banks in form of bonds will strengthen their balance sheets by
removing liabilities associated with carrying loan assets and thus provide greater cash
resources that enhance their competitiveness as well as abilities to expand into other
business development.
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| The
issue of Mortgage Bonds provides enormous benefits to property developers in the areas of
 | New stream of income derives from the interest
spreads in the range of a few percent per annum depending on the class of bonds to be
issued, for example, a higher interest spread earning for “Second Mortgage” or
“Unsecured Home Loan” can be attained due to its traditionally high-interest
bearing nature.
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| Developers
as to entice buyers of the properties can provide more competitive rates and higher
mortgage ratios including both first and second mortgages.
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| Enhance corporate branding through the offers
of one-stop financial and investment package to both homebuyers and investors.
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| Greater
exposure to a gigantic pool of capital to enlarge financial resources and scope of
business development.
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| With
a vast participation of highly rated financiers, credit enhancers and insurance companies
into the package of offerings of the Mortgage-Backed Securities, only limited long-term
liabilities derive from the provision of corporate or parental guarantees to the bonds are
accountable which may have an minimal implied effect on the respective transaction rather
than the balance sheet or credit rating of the company.
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Benefits For Issuers
High leverage... premium...
good margins...extra cash...
Cost Benefits
An alternative
low-cost, flexi-termed risky-free funding source from traditional financing
Leverage Benefits
Market variables, generic and
structural elements determine the leverage of a bond
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