NPI is Silent To
↳ Nonpayment insurance ("NPI") requires no involvement from the borrower and no disclosure.
Voting On Sacred
Rights Issues Only
↳ Lender controls all amends and waivers.
↳ Insurer consent required only for sacred rights issues. Consent relates to the policy enforceability, not to the loan itself.
Enhances Competitive Positioning
↳ Lenders often use the product to increase commitment amount without exceeding credit limits, which improves syndicate positioning, drives left-lead underwriting mandates, and increases cross-sell revenue.
Full Transfer Of Principal Repayment Risk
↳ Insurers indemnify the bank against non-payment of principal.
↳ Insurers rated A- and above.
↳ Entails full transfer of default risk to insurers.
Speed Of Commitment
↳ Commitment within 2 weeks to facilitate internal bank credit approval.
↳ Information requirements align with syndicate level information to streamline information exchange.
Capital Cost Savings
↳ ARC's product achieves full substitution benefit under Basel IV and most national regulatory regimes, thereby materially reducing RWA.
↳ The product also offers material CECL and IFRS9 provisioning savings.