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A growing number of companies and individual borrowers worldwide are unable to repay their debts or make interest payments due to covid-led disruptions. Lenders have been hit hard by the covid-led disruptions, which triggered an unprecedented economic slump hurting borrowers’ ability to repay debts.
WTE credit default swap is a financial instrument that protects all your loans and other financial assets against the risks of non-payment, defaults, bankruptcies, credit rating downgrades, losses, and unforeseen events. If your loans and financial assets underperform, give no ROI, sustain any losses, decline in value, or fails for any reason, CDS guarantees that you will get monetary compensation of 100% of the book value of your assets.
Whether your assets are worth $10M, $100M, $100B, or more, it doesn’t matter. Thus, you can now recover and get full compensation for all your bad loans, distressed assets, and non-collectible receivables at their total book value by transferring the credit risk to WTE in exchange for a certain premium. The “Default swap premium” is the premium (fixed rate) that the buyer agrees to pay the WTE in exchange for the transfer of credit risk.
For example, if you are worried that a borrower will default on a loan, you could use a CDS to offset or swap that risk. To swap the risk of default, you would buy a CDS from WTE at a 1% premium. In return, WTE agrees that – if the debt issuer (borrower) defaults or experiences a credit event – WTE will pay you the security’s value and all interest payments that would have been settled between that time and the security’s maturity date. Thus, WTE will reimburse you if the borrower defaults (usually the loan’s face value). For example, if you purchase a CDS on a $1 billion loan and the debtor defaults for any reason, WTE will pay you $1 billion and all interest payments in cash.
How can WTE pay out so much for the 1% premium received? Apart from the fact that WTE is highly capitalized, its CDS is financially backed by the creditworthiness and liquidity of millions of major corporations, banks, and financial institutions that make up its membership.
CDS helps you transfer credit risks to WTE without transferring the underlying bond or credit assets. Thus, you will be protecting loans on your books against many risks, including non-payments, defaults, bankruptcies, credit rating downgrades, obligation acceleration, repudiation, and moratorium. You can have peace of mind knowing that your credit risks are covered, your accounts are protected, and your payments guaranteed.
CDSs are designed to cover many risks, including:
1. BANKRUPTCY: The reference entity becomes insolvent or is unable to pay its debts.
2. FAILURE TO PAY: The reference entity fails to make interest or principal repayments when due.
3. DEBT RESTRUCTURING: The debt obligation configuration is changed so that the credit holder is unfavorably affected.
4. OBLIGATION ACCELERATION OR OBLIGATION DEFAULT: The debt obligations of the issuer becomes due before their initially scheduled maturity date.
5. REPUDIATION/MORATORIUM: The issuer of the underlying bond (The reference entity) rejects their debt, effectively refusing to pay the interests and principal.
Not only does a CDS protect you against the risks of non-payment, but CDS will also allow you to lower your bad debt reserve significantly. By reducing your bad debt reserve, you will be able to take excess bad debt reserves back into income (by provisioning substantially less), which means more money for reinvestment, improved earnings, increased profits, shareholder equity, and investment capital, etc. CDS premiums are tax-deductible (whereas your bad debt reserve is not).
EXPAND YOUR CREDIT BUSINESS WITHOUT RISKS
You can use the CDS to guarantee predictable revenue and profit for your business over 12 months and eliminate the element of uncertainty, failure, low sales, low cash flow, low profit, financial losses, and risks from your business.
The WTE CDS provides indemnification if an unexpected loss occurs, thus protecting your revenues, profits, balance sheet, and employees from what could otherwise be a financially catastrophic credit event. Therefore, CDS may be the wisest investment your company can make to ensure its profits, cash flow, capital, and employment are protected.
You could make up to 10,000% ROI by buying CDS on the debt owed by a company you’re sure may default, go bankrupt or experience any other credit event. To buy CDS on the debt owed by another company, you do not need to own the underlying security, have any connection to the reference entity, and do not even have to suffer a loss from the default event. If the company you bet on is unable to repay its debts or fails to make interest payments, then you would receive monetary compensation of 100% of the book or market value of the loan in question.
For example, let’s say you invested $100,000 to buy the CDS on the $10M loan owed by ABC company to Bank of America because you’ve read in the news that ABC company is on the verge of bankruptcy or having financial challenges. If ABC company fails to make interest payments to Bank of America, you can ask WTE to redeem your CDS on ABC company. WTE will pay you $10 million, which is the amount owed by ABC company. By investing $100,000 on the CDS on ABC company’s debt, you were able to earn $10 million and interest, which is about a 10,000% ROI. For example, you could purchase $1M CDS on the $100M loan owed by XYZ company to Bank of America. If XYZ fails to pay or defaults on the loan, WTE will pay you $100M plus the loan’s interest.
You can invest in the CDS on the debts of as many companies as you like. There is no limit to the number of companies that you can purchase CDS on. Most importantly, you do not need to own the underlying security or asset for you to buy the CDS on it. Thus, you can make up to 10,000% ROI out of thin air based upon other companies’ assets.