What Are the Different Types of Debt Relief Programs?

Bond repurchase means that both parties to a bond transaction, while conducting the bond transaction, agree in a contractual manner to the agreed price (principal and interest calculated at the agreed repurchase rate) at a future date. The repurchase party) repurchased the bond from the "buyer" (reverse repurchase party). From the perspective of the initiator of the transaction, any transaction that borrows funds and borrows funds is called a positive bond repurchase; any transaction that actively lends funds to obtain a bond pledge is called a reverse repurchase.

Bond repo

Interpretation 1:

Bond repo transaction is a kind of fund lending behavior with bonds as collateral. In a transaction, the buyer and seller are at a mutually agreed interest rate (

Bond repurchase includes closed repo (bond pledged repo) and open repo (bond buyout repo).

Bond repurchase is necessary for the financing party, securities lending party and exchange: the financing party obtains the right to use a large amount of funds in a short period of time without losing its bonds; and the provider of funds is generally a financial institution Or some companies, through short-term borrowing of large amounts of funds to obtain interest; while the exchange earns commissions and fees from the financier. ^[1]

which is

1,

1. Formula: Revenue = turnover X annual yield X repurchase days / 360 days

2. For example, on June 18, 2011, the maximum interest rate for a one-day government bond repurchase was 7.8%, which means that investors can obtain funds every 100,000 yuan on the next day if they withdraw funds on that day?

Yield = 100000X7.8% X1 / 360 = 21.67 yuan

Compared to other transactions, because the financing party must have sufficient bonds as collateral, bond repurchase, as a safe and stable return investment product, has become one of the tools for some institutions to conduct liquidity management. .

However, the use of repurchases also faces default risks and operational risks. Due to the introduction of a non-performance system in open repurchase, securities lending and financing parties are allowed to abandon the performance payment to get rid of the obligation to repay the bonds or receive the bonds. After measurement, the two parties can choose to abandon the performance payment and default. For example, the value of the position of the reverse repurchaser significantly exceeds the forward price, or the market price of the positive repurchase is significantly lower than the forward price, which may lead to a vicious default. There are of course forced defaults due to insufficient liquidity. The performance bond locks the upper limit of the loss to a certain extent, and can also regulate the active degree of market participation.