1. Credit & Risk Assessment
2. Structuring the Note
3. SPV Setup & Legal Framework
4. Issuance & Distribution
1. Credit & Risk Assessment
Every issuance begins with a thorough evaluation of risk. Investors demand clarity on the creditworthiness of the underlying assets. Key considerations:
- Internal vs. External Rating:
Use AI-driven credit scoring
or external agencies like Moody’s or Fitch.
- Sanctions Screening:
Conduct AML/KYC and verify OFAC, EU, and UN sanction lists.
- Default Probability:
Analyze historical payment behavior and industry risk.
- Machine Learning Analytics:
Advanced AI modeling can assess transaction risk beyond traditional methods.
2. Structuring the Note
Once credit risks are mapped, the note is structured to match investor preferences and risk appetite:
- Collateralization:
Backed by receivables, inventory, or shipping documents.
- Tenor:
Typically short-term (30-180 days) to match trade cycles.
- Debt Seniority:
Senior secured notes attract institutional capital.
- Interest Rate:
Benchmarked against SOFR, EURIBOR, or Prime Rate.
3. SPV Setup & Legal Framework
To ensure bankruptcy remoteness and investor protection, the SPV must be properly established:
- Jurisdiction Selection:
Luxembourg, Cayman, Delaware, Singapore.
- Legal Structuring:
Uses securitization vehicles, LLCs, or trusts.
- Regulatory Compliance:
Ensures full adherence to Basel III/IV, IFRS, and MLETR.
- Investor Reporting:
Regular financial disclosures and transaction tracking.
4. Issuance & Distribution
The final step is making the note investable and ensuring liquidity:
- Private Placement vs. Exchange Listing:
Direct to investors or listed on platforms like LuxSE, Euronext, or Tokenized Exchanges.
- Smart Contracts & Tokenization:
Digital issuance streamlines settlement and compliance.
- Institutional Placement:
Distributed via banks, hedge funds, family offices.