Bond Portfolio backed loan

Business requirement

The client wants to maximise LTV (Loan to Value) on a bond portfolio.


The participating bank sets up a back-to-back arrangement with the Investment Banking division so that the Private Banking division is able to extend a loan to the client with the expected LTV.

The back-to-back set-up is achieved via a “put option” between the PB and the IB utilising dynamic hedging expertise of the IB.

This structure maximises LTV for clients that are sensitive to leverage over cost.