In a typical FABS structure, a life insurer sells a single financing agreement to an SPE that finances the financing agreement by issuing FABS to institutional investors with a small unit value. In addition, at least two types of FABS are designed to address short-term investors, such as. B first-class money market funds: Extendible Funding Agreement Backed Notes (XFABN) and Funding Agreement-Backed Commercial (FABCP). These securities have significantly shorter maturities than the underlying financing agreement, which generally lasts about ten years. XFABN often has an initial term of 397 days, but allows investors to gradually extend the term of their bonds by one month. Fabcp is a fixed-term contract of one week to six months.3 The fabs market collapsed during the financial crisis, when institutional investors withdrew from the structured products markets6. when the level of FABS fell to about $60 billion, or just over a third of the outstanding amount at its peak in 2008. Since then, FABS issuances have recovered somewhat, with our latest estimates suggesting that fabs outstanding reached around $75 billion in 2016: Q1. Staff calculations are based on data collected by Bloomberg Finance LP and moody`s ABCP Program Index. Data on securities secured by financing agreements will be available from August 1997. Fabcp`s daily estimates correspond to the level at the end of the previous quarter. Fabs in expanded financial accounts In order to better understand the dynamics of the FABS market collapse during the financial crisis and to monitor this funding market in the future, the EFA project provides FABS data that is both more frequent and more granular than that reported in the financial accounts. In particular, the EFA project provides daily data on the three main types of FABS problems: FABN with a lifespan of more than 397 days (Figure 2), FABN with maturities of 397 days or less (Figure 3), and FABN with integrated put options such as XFABN (Figure 4).
In addition, the EFA project provides quarterly data on FABCP (Figure 5). As shown in Figure 6, FABNs with longer maturities represent the vast majority of outstanding FABS. However, a closer look at the underlying data shows that it was a race on XFABN from the summer of 2007 that caused the severe and sudden contraction in FABS funding during the financial crisis. 1. Securities are not considered financing agreements or insurance or pension contracts under New York law; Daily outstanding securities secured by financing agreements at maturity: PDF | The products for access to the fund agreement are similar to capital guarantee funds or guaranteed investment contracts, as these two instruments also promise a fixed return with little or no risk to capital. In other words, guarantee funds can generally be invested without risk of loss and are generally considered risk-free. However, like certificates of deposit or pensions, financing agreements generally offer only modest returns. After the lump sum investment, the Mutual of Omaha financing agreement allows for termination and repayment by the issuer or investor for any reason, but the terms of the contract require either the issuer or the investor to have 30 to 90 days` notice before the last day of the interest rate period.
. . .