"The proposed Debt Issuance would provide DTC with an additional source of default liquidity, which would allow it to diversify its sources of default liquidity"
"The proposed Debt Issuance would provide DTC with an additional source of default liquidity, which would allow it to diversify its sources of default liquidity and mitigate risks to DTC that it is unable to secure default liquidity resources in an amount necessary to meet its liquidity needs."
https://www.dtcc.com/-/media/Files/Downloads/legal/rule-filings/2023/DTC/SR-DTC-2023-801.pdf
Wut Mean?:
- DTC proposes to issue senior notes up to a total of $5 billion.
- At any given time, the expected amount issued would be around $2-3 billion.
- The initial issuance is anticipated to be between $500 million and $1 billion, aimed at garnering investor interest.
- Each issuance is estimated to range from $250 million to $1.5 billion.
These senior notes:
- Will be unsecured, unsubordinated, and non-convertible.
- Will have either fixed or floating interest rates, based on market standards and DTC's creditworthiness.
- Will be maintained as global notes under DTC's name or its nominee, Cede & Co.
- Will only be transferred via DTC's book-entry system.
Maturity of the notes will range between two to ten years, as:
- Longer maturities are pricier to issue and pose more interest rate risks.
- DTC plans to stagger the maturity dates for different issuances.
- DTC can optionally redeem the notes, in full or partially, before their maturity.
- Proceeds from the issuance will be held either at the Federal Reserve Bank of New York or other reputable financial institutions.
- These funds will be accessible for settlements as necessary.
- The specifics of the Debt Issuance will vary, but DTC intends to use the funds as default liquidity.
- DTC's primary default liquidity sources are cash deposits to its Participants Fund and the Line of Credit. The proposed issuance would provide a supplemental source, reducing risks like not being able to renew the Line of Credit.
trying to create new sets of bag holders that are not already holding...
How to comment:
- Use the Commission's online comment form at https://www.sec.gov/rules/sro.shtml
- OR email comments to [email protected] with "File Number SR-DTC-2023-801" in the subject line.
- Comments due within 21 days
TLDRS:
- DTC is issuing debt to cover risk of member default
- "The proposed Debt Issuance would provide DTC with an additional source of default liquidity, which would allow it to diversify its sources of default liquidity and mitigate risks to DTC that it is unable to secure default liquidity resources in an amount necessary to meet its liquidity needs."
- Open for comment!
