Guaranteed Investment Note (GIN) is part of Funding Societies’ initiatives to offer a wider variety of products to cater for different investors’ preference. At present, there are two products under the Guaranteed series (both 100% principal & return guaranteed investment):
MBBG - Guaranteed Investment Notes (Term Financing)
MBSG - Guaranteed Investment Notes (Bullet Financing)
1. How does it work?
As per existing products, Funding Societies will provide financing to Micro, Small & Medium Enterprises (MSMEs) via investment notes, which is funded from investors. MSMEs will make repayments (principal and interests) to investors as per agreed schedule
However, investment notes issued under the Guaranteed series will be guaranteed by an appointed entity (Guaranteeing Entity). In the event of non repayment by the Issuer (≥ 15 days past due (DPD)), the Guaranteeing Entity will repay the principal and interest due to Investors. The rights to claim of debt from the Issuer will then be transferred to the Guaranteeing Entity.
2. Who is providing the guarantee?
The investment notes will be guaranteed by an appointed entity (Guaranteeing Entity). The Guaranteeing Entity maintains capital and cash reserve buffers to ensure investors are repaid in a timely manner when issuers are delinquent / default on repayments.
3. Why is the interest rate lower than other products?
In exchange for the Guaranteeing Entity bearing the non-repayment risk, a fee will be paid to the Guaranteeing Entity. In other words, investors are giving up some of the potential upside (potential interest earned) in exchange for more stable and consistent returns.
4. What happens in the event of delinquency/default?
When an Issuer misses a repayment (≥ 15 days past due (DPD)), the Guaranteeing Entity will step in and repay the principal and interest due to Investors. The rights to claim of debt from the Issuer will then be transferred to the Guaranteeing Entity.
5. What are the risks involved?
There may be a possibility that the Guaranteeing Entity is not able to fulfill its financial obligations in a timely manner.
However, there are several mechanisms in place to ensure that the Guaranteeing Entity has the capabilities to meet its financial obligations. For instance, the Guaranteeing Entity is required to maintain capital and cash reserve buffers to ensure investors are repaid in a timely manner when Issuers default on repayments.
6. Any terms and conditions to participate in GIN?
No. GIN is open to all Investors.
7. How do I invest in GIN?
Guaranteed Investment Note will be made available to investors via Auto-Invest as well as Manual Investment.