|Label:||Specialised Lending Method|
This dimension categorises information reported based on the specialised lending methods defined under the Internal Ratings-based approach to credit risk, as determined in accordance with relevant prudential standards.
The information reported is in relation to the commodity finance method of funding under the Internal Ratings-based (IRB) approach to credit risk in accordance with relevant prudential standards.Commodity finance is structured short-term lending to finance reserves, inventories or receivables of commodities (e.g. crude oil, metals or crops) where the exposure will be repaid from the proceeds of the sale of the commodity and the obligor has no independent repayment capacity. This is the case when the obligor has no other activities or material assets on its balance sheet. The structured nature of the financing would be designed to compensate for the credit quality of the obligor. The lender's rating of the exposure would generally reflect its self-liquidating nature and the lender's capacity to structure the transaction rather than the credit quality of the obligor.This type of lending is generally distinguishable from exposures financing the reserves, inventories or receivables of other more diversified corporate obligors as the lender would be able to rate the credit quality of the latter type of obligors based on their broader ongoing operations. In such cases, the value of the commodity serves as a risk mitigant rather than as the primary source of repayment and the exposure would not generally be included as commodity finance.
|IncomeProducingRealEstateFinance||Income Producing Real Estate Finance||DV5083||
The information reported is in relation to the income-producing real estate finance method of funding under the Internal Ratings-based (IRB) approach to credit risk in accordance with relevant prudential standards.Income-producing real estate is a method of providing funding for real estate (e.g. office buildings to let, retail space, multi-family residential buildings, industrial or warehouse space and hotels) where the prospects for repayment and recovery of the exposure depend primarily on the cash flows generated by the asset. The primary source of these cash flows would generally be lease or rental payments or the sale of the asset. The obligor may, but need not necessarily, be a SPV, an operating company focused on real estate construction or holdings or an operating company with sources of revenue other than real estate. The distinguishing characteristic of income-producing real estate against other corporate exposures that are collateralised by real estate is the strong positive correlation between the prospects for repayment of the exposure and the prospects for recovery in the event of default, with both depending primarily on the cash flows generated by the property.
The information reported is in relation to the object finance method of funding under the Internal Ratings-based (IRB) approach to credit risk in accordance with relevant prudential standards.Object finance is a method of funding the acquisition of specific assets (e.g. ships, aircrafts, satellites, rail stock and motor vehicle fleets) where the repayment of the exposure is dependent on the cash flows generated by the specific assets that have been financed and pledged or assigned to the lender. A primary source of these cash flows might be rental or lease contracts with one or more third parties.This does not include those exposures to an obligor whose financial condition and debt-servicing capacity enables it to repay the debt without undue reliance on the specifically pledged or assigned assets.
The information reported is in relation to the project finance method of funding under the Internal Ratings-based (IRB) approach to credit risk in accordance with relevant prudential standards.Project finance is a method of funding where the lender looks primarily to the revenues generated by a single project as both the source of repayment and as security for the exposure. This type of financing is usually for large complex installations that could include, for example, power plants, chemical processing plants, mines, transportation infrastructure, environment and telecommunications infrastructure. Project finance may take the form of financing the construction of a new installation or refinancing an existing installation, with or without improvements.In such transactions, a lender is usually paid solely, or almost exclusively, out of the money generated by the contracts for the facility's output. The obligor is usually a special purpose vehicle (SPV) that is not permitted to perform any function other than developing, owning and operating the installation. The consequence is that repayment depends primarily on the project's cash flow and on the value of the project's assets. This does not include exposures where the repayment of the exposure depends primarily on a well-established, diversified, contractually obligated end-user.