Financial securities: negotiable debt securities

Salamno, visionary! Naimbag a bigat, descendant of Abraham! “The LORD is not slow in keeping his promise, as some understand slowness. Instead he is patient with you, not wanting anyone to perish, but everyone to come to repentance.” (2 Peter 3:9, NIV) The LORD is not slow. He is waiting for you to grow. For you to gain wisdom. For you to exercise your intelligence. For you to dare. For you to move forward. For you to sow. For your motivations to be good. For your prayers to be sincere. For your character to be like that of CHRIST. He is not slow; he is waiting for you. Yes, you believe. But do you believe enough to commit yourself? Do you believe enough to obey? Do you believe enough to start?

“Cut the grass in the fields and, while the new grass grows, gather hay on the mountains. Have sheep to make clothes for yourself, and goats to buy a field. Use the milk your goats give in abundance to feed yourself, your family, and your servants.” (Proverbs 27:25-27, Fluent french translation)

A receivable is a sum of money owed by a client (whether a legal entity or an individual). The receivable can be commercial (a sale not yet paid) or financial (a loan). This person has made a loan or delivered a product or service to their customer and, by granting them a payment period, the amount owed becomes a receivable. The receivable is the amount that must be paid to the supplier. Their customer is a creditor. For the customer, this receivable is a debt. The supplier is a debtor.

Securitization of receivables is a process whereby a legal entity converts its receivables into negotiable securities on the financial markets. The supplier, known as the assignor, entrusts its receivables to a specialized institution, which converts them into negotiable securities. Securitization can be full (traditional) or synthetic. When it is full or traditional, the receivables become debt securities. When it is synthetic, the credit risk becomes a debt security.

A debt security is a security representing the holder's claim on the issuer of the security. It is an acknowledgment of debt. The security is negotiable when it can be traded (sold). In Europe, it is customary to simply say “debt security” rather than “negotiable debt security.” Purchasers of the securities will be repaid through debt payments (cash flows). They receive interest while awaiting repayment of their principal. Upon repayment of the principal, the securities are said to have been redeemed by the issuer (the supplier).

Types of debt securities:

• NEU CP (Negotiable Euro Commercial Paper): issued in the short and medium term. In France, they replace Negotiable Certificates of Deposit (CDN), Commercial Paper (BT) and Negotiable Medium-Term Notes (BMTN).

  • Negotiable Certificates of Deposit (CDN): term of between one day and one year.

  • Commercial Paper (BT): short term, exclusively reserved for companies. Issuers and purchasers are companies.

  • Negotiable Medium-Term Notes (BMTN): term of more than one year, no maturity limit, fixed rate.

• Negotiable Treasury Bills: issued by governments.

• Bonds: see previous articles.

** Salamno = Good morning in Amharic (Ethiopia)

** Naimbag a bigat = Naimbag a bigat = Good morning in Ilocano, also known as Ilokano and Iloco (Philippines)