What Is a Loan Buyout?

In mature foreign markets, repo is the abbreviation of "sale and repurchase agreement", which generally refers to the fact that the two parties to a bond transaction, while conducting the bond transaction, agree on a date in the contract The transaction of buying back the bond by the "seller" to the "buyer" at the agreed price. There are two types of repurchase that are common in foreign countries: Classic Repo and Buy / Sell-Back. The two forms of repurchase originally had large differences in terms of contract form, margin adjustment, and default handling, but with the Public Securities Association (PSA) and the International Securities Market Association (ISMA) General Basic Repurchase Agreement (PSA / ISMA General Master Repo Agreement), the two forms of repurchase are becoming the same. Most countries are launching standard repo agreements that are suitable for the operation of the domestic market based on the PSA / ISMA agreement.

Buyout repo

There is no essential difference between classic repo and buy / sell back transactions. The main differences are:

First, the quotation method is different . The classic repo is quoted at the price of the first transaction and the repurchase rate, and the repurchase interest is reflected by the repurchase rate; the repurchase / sell back transaction is traded at the price of two transactions. (Converted to two transaction prices for trading and settlement), repo interest is included in the two purchase transaction prices. From the perspective of form, the classic repurchase performance is financing, while the buy / sell back transaction is two cash transactions.

The second is that the interest payment processing of repurchase bonds is different , which is actually caused by different quotation methods. Due to the transfer of ownership of the repurchase bond, the buyer of the bond will receive the corresponding interest payment. However, in the classic repo, the reverse repurchase party shall return the full amount of interest paid during the repurchase to the positive repurchase party; In buy / sell-back transactions, the interest paid during the repurchase period is adjusted at the transaction price due.

In addition, there is also a transaction method that is often classified as a repurchase transaction: Securities Lending. This transaction is actually a transaction in which investors use other bonds they hold as pledge to integrate into specific bonds. In essence, this trading method does not belong to repurchase transactions, but a new type of transaction.

Bond buyback repurchase refers to bondholders (

from oversea

From the existing definitions and regulations, buyout repurchase is a one-time settlement

Looking at the essential characteristics of buyout repo, a buyout

The transaction subject of the Treasury bond buyback repo on the Shanghai Stock Exchange is limited to the investment in opening B-header and D-header accounts in the Shanghai branch of China Clearing Corporation.