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Collateralized Transactions : Key Considerations for Public Lenders and Borrowers (English)

In a response to a request from the G20 IFA Working Group, this note provides a framework for public lenders and borrowers to assess collateralized financing practices from a development perspective. It describes the main dimensions of collateralized debt instruments. Starting from the observation that collateralization may permit market access and transactions that otherwise would not occur, it then discusses the broader pros and cons of such arrangements, as well as technical and macroeconomic considerations that arise in their design. It concludes by describing a decision process for public lenders and borrowers (general government entities, state enterprises, and agencies that act on their behalf) to ensure that collateralized transactions are consistent with the G20’s Operational Guidelines for Sustainable Financing.

Details

  • Document Date

    2020/01/23

  • Document Type

    Board Report

  • Report Number

    145601

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2020/01/31

  • Disclosure Status

    Disclosed

  • Doc Name

    Collateralized Transactions : Key Considerations for Public Lenders and Borrowers

  • Keywords

    borrower need; public lender; efficient use of resource; irrevocable letters of credit; payment and settlement system; alternative sources of funding; alternative sources of finance; use of collateral; general government expenditure; risk of debt; flow of revenue; export credit; negative pledge clause; debt instrument; Fiscal Risk Management; public sector borrowing; amount of oil; control of corruption; overall debt strategy; loss of collateral; future tax revenue; overall debt management; debt management authority; lending to country; event of default; certificate of deposit; assignment of receivable; sale of security; debt service reserve; public sector borrower; debt distress risk; international trade finance; Special Purpose Vehicle; off balance sheet; export credit agencies; barrel of crude; Oil & Gas; debt sustainability analysis; public investment management; class of debt; existence of collateral; debt management strategy; Oil and Gas; debt restructuring; unsecured creditor; development perspective; Borrowing Countries; legal framework; market access; future revenue; project financing; state enterprises; macroeconomic framework; burden sharing; government entity; Exit Strategy; commodity export; liquidity crisis; senior debt; unsecured debt; secured asset; government issue; commodity trader; case assessment; risk result; beneficial outcomes; fishing right; public transparency; contractual term; debt resolution; sovereign borrower; marketable security; legal process; secondary market; oil platform; airline ticket; project revenue; legal fee; bond issuance; negative incentive; commodity price; financial intermediaries; budget loan; price volatility; unintended consequence; revenue bond; financial distress; commodity collateral; budget flexibility; agency problem; liquidation cost; low risk; multiple channels; finance strategy; borrowing cost; future asset; public borrower; electricity revenue; transaction cost; government resource; risky situation; indirect approach; public domain; security provider; legal risk; oil expenditure; escrow account; sustainable financing; equity share; enforcement action; minimum balance; movable asset; recent years; related agreement; political impact; securities issue; oil cargo; oversight arrangement; diffuse ownership; marketable instrument; trade financing; governing law; secured transaction; sovereign borrowing; net impact; repo agreement; state pension; credit line; export earning; existing asset; security interest; oil revenue; financing practice; ticket sale; Cash flow; acceptable collateral; financing need; government consumption; export earnings; full disclosure; generation charge; road toll; physical asset; alternative credit; sovereign debt; domestic legislation; fiscal deficit; external advisors; project finance; government capacity; adequate transparency; future creditor; enhancing transparency; analytical tool; commodity producer; financial instrument; empirical analysis; lending exposure; borrower default; payment obligation; existing creditor; repayment capacity; market price; credit operation; public debt; potential implication; Learning and Innovation Credit; syndicate debt; industrial plant; infrastructure loan; financial implication; risky borrower; high debt; unsecured loan; sample bias; sovereign guarantee; standard practice; perceived risk; security trading; derivative market; debt crisis; physical commodity; oil exploration; brady bond

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Citation

Collateralized Transactions : Key Considerations for Public Lenders and Borrowers (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/689561580497778132/Collateralized-Transactions-Key-Considerations-for-Public-Lenders-and-Borrowers