2 hrs confidence:   peer agreement (net): -1 securitization tranche
Explanation:
Unlike conventional corporate bonds which are unsecured, securities created in a securitization are "credit enhanced", meaning their credit quality is increased above that of the originator's unsecured debt or underlying asset pool. This increases the likelihood that the investors will receive the cash flows to which they are entitled, and thus enables the securities to have a higher credit rating than the originator. Some securitizations use external credit enhancement provided by third parties, such as surety bonds and parental guarantees (although this may introduce a conflict of interest).
The issued securities are often split into tranches, or categorized into varying degrees of subordination. Each tranche has a different level of credit protection or risk exposure: there is generally a senior ("A") class of securities and one or more junior subordinated ("B", "C", etc.) classes that function as protective layers for the "A" class. The senior classes have first claim on the cash that the SPV receives, and the more junior classes only start receiving repayment after the more senior classes have been repaid. Because of the cascading effect between classes, this arrangement is often referred to as a cash flow waterfall.[9] If the underlying asset pool becomes insufficient to make payments on the securities (e.g. when loans default within a portfolio of loan claims), the loss is absorbed first by the subordinated tranches, and the upper-level tranches remain unaffected until the losses exceed the entire amount of the subordinated tranches. The senior securities might be AAA or AA rated, signifying a lower risk, while the lower-credit quality subordinated classes receive a lower credit rating, signifying a higher risk.
Source:https://en.wikipedia.org/wiki/Securitization
| Francois Boye
United States
Local time: 10:29
Specializes in field
Native speaker of:  French
PRO pts in category: 335
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| | Notes to answerer
Asker: Thanks, but I'm afraid securitization is not mentioned anywhere, so I would be reluctant to assume it's part of the issue.
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| | Login to enter a peer comment (or grade) |
8 hrs confidence: peer agreement (net): +2 segment
Explanation:
It seems to me that there is no "issuance" as such, so tranche might no be the right word here. It appears that the company has been granted two loans, or a loan in two segments, one for foreign trade operations and one for working capital (the correct translation of "circulante" in this context)
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Note added at 1 day 3 hrs (2018-08-19 14:37:31 GMT)
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Credit lines instead of loans, perhaps.
| patinba
Argentina
Local time: 11:29
Specializes in field
Native speaker of: English
PRO pts in category: 1430
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| | Grading comment | Since I believe no debt issues are involved, but instead a sort of targeted loan in two parts, I'm going to use "segment". Thank you, everybody, for your contributions. You've helped a lot. |
| Notes to answerer
Asker: Let me add some more background information. This is a company in financial hot water; they expanded far beyond what their market would bear, and now they're having to close retail shops and find that they can't repay their bank loans. They used to have a financing agreement, but they've been unable to uphold it. Here's how the text continues:
"Asimismo, con fecha …., la Sociedad Dominante ha firmado con las entidades financiadoras la restructuración de la deuda financiera que mantenía con las mismas a 31 de diciembre de 2016, estableciendo:
- Un tramo COMEX por un límite máximo de XXX euros con un límite de financiación de YYY días, que sustituye las líneas de financiación a la importación y exportación (which it used to have but can no longer meet the conditions of).
- Un tramo circulante por un límite máximo de ZZZ euros, con un vencimiento inicial en ….., renovable tácitamente por un año adicional ante el cumplimiento de determinados requisitos.
- Los préstamos bancarios mencionados a continuación en esta nota se consideraban deuda excluida del acuerdo y mantienen su fecha de vencimiento original."
Nowhere does the text contain any mention of the various banks' (nearly half a dozen) having formed a sindicato or any other sort of joint action by the banks, except for the company's claim to have signed a single agreement with its banks. There's been a capital increase, but all the new shares were bought up by shareholders. They obviously think they can dig their way out of the hole, if their banks would just give them a little more time. Thanks, everybody, for your contributions, and I hope this added context helps.
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