Products

Northern Arc debt products

  • Rated Securitisation

    Rated securitization is one of Northern Arc’s most popular structured products, for large and small client partners alike. In addition to structuring and arranging a securitization transaction, Northern Arc retains skin in the game by routinely investing in subordinated tranches of the securitization deal. Northern Arc manages the end-to-end structuring and execution of such transactions including selection of pool, designing an optimal structure for clients and investors, documentation, rating and legal processes. We also arrange for investors who invest in the securities, issued the Special Purpose Vehicle (SPV) set up for such transactions.  Northern Arc structures, arranges and invests in both single originator and multi-originator securitization (MOSECR) deals. The underlying for securitisation can be retail as well as whole-sale loans.

    Multi-Originator Securitisation (MOSECR) - Under this structure, loan pools originated by various client partners are bundled together and sold to an SPV which then issues securities backed by these loans. The pools provided by each client partner are bound together by a common enhancement in addition to pool specific enhancement also being provided by each of them. This is a unique product offering by Northern Arc. We have advised  various global financial institution on this product as well.

  • Bilateral Assignment

    Bilateral assignment is one of Northern Arc’s long-standing product offerings and involves a sale of portfolio from the originating client partner to the assignee or buyer. Northern Arc as a structurer and arranger, hand-picks loans from the client partner’s portfolio that can be bought by the assignee, identifies assignee investors, and facilitates deal execution. In some cases, Northern Arc participates in the deal via a risk participation facility to ensure alignment of incentives.

  • Pooled Bond Issuance Programme

    Northern Arc launched the country’s first pooled bond issuance program in March 2014. Under this structure, multiple entities issue rated, listed NCDs backed by a common guarantee. Northern Arc acts as an arranger and structurer of the issuance. A Guarantor (Financial Institution) extends an irrevocable, unconditional, payable on demand partial guarantee as a percentage of principal value of the basket of NCDs. The guarantee is issued on a pooled basis i.e. may be drawn down upon if any of the client partners default. Smaller client partners being unable to get capital market access prompted us to launch the PBI product. The structure, though complex to execute, has seen significant scale over the years under review and represents significant market-making for Northern Arc’s clients. Banks, large NBFCs and Mutual Fund houses are key investors in the collateralized pooled-bond programme.

  • Pooled Loan Issuance Programme

    The Pooled Loan Issuance programme was launched by Northern Arc in June 2017. Under this program, the borrowers avail term loans from a lender, which is arranged by Northern Arc and backed by a common guarantee. Northern Arc acts as an arranger and structurer of the issuance. A Guarantor (Financial Institution) extends an irrevocable, unconditional, payable on demand partial guarantee as a percentage of principal value of the basket of loans. The guarantee is issued on a pooled basis i.e. may be drawn down upon if any of the Originators default. The structure is particularly useful for Banks and NBFCs who can increase their advances book while availing of credit enhancement to protect their loans.

  • Single Corporate Issuer Partial Credit Enhanced Bond

    The Single Corporate Issuer Partial Credit Enhanced (SPiCETM) Bond was launched by Northern Arc in December 2017. Under this structure, an entity issues a NCD, which is backed by a partial guarantee by a Financial Institution as well as a collateral pool, that the investor has access to under certain situations. This product is fabulous way of getting investors to lend to certain Originators in lower rating categories by providing investors with partial guarantee and enhanced rating, which fits in the framework of certain investors. While the RBI published guidelines on partial guarantee backed corporate bonds in September 2015, Northern Arc was the first to launch this in December 2017.