By Bernard Hecht
SS&C’s DBC Housing Consolidation program allows issuers to maximize the advantages that can be achieved when different bond series are combined into one bond resolution. The program is structured with simple drop-down menus that present various choices. These are in addition to simply providing for series’ totals to be combined and for series with surpluses to fund those that have deficits. Some of these options include:
- Retain in Revenue Account: The percent of surplus money found in the combined series surpluses account that will be deposited in a Master Revenue Account.
- Redemption Accounts: The percent of surplus money to be transferred from the individual series to a Master Redemption Accounts, which in turn can then call bonds. Some of the choices are to create call priority “tags” within each series and then channel the aggregated funds to all bonds in order of either
- Highest interest rates – but only in order of these priority groupings or “tags”
- By highest coupon only – thereby overriding these “tags”
- Based exclusively on the priorities
- Distribute to Issuer: The percent of surplus money found in the combined Revenue Account that will be transferred to the Issuer .
The user can also elect to change their selections over the life of the indenture based on choices that include specific date, targets of assets/liability parity, date and parity, and when a specific bond or series is concluded.
In addition to the disbursement of total revenues, the program allows the user to extract and manipulate detailed parts of the revenue and expense. For example, loan revenues or reserve fund income from a series can be directly sent to support a different series.
These are just a portion of the many opportunities of consolidated bond series structuring made easy through SS&C‘s DBC’s Housing and CONSOL programs.