Mauritian Debt Capital Markets

A green bond is a type of debt security issued by governments, municipalities, corporations, or other organisations with the specific purpose of funding environmentally friendly and sustainable projects. The distinguishing feature of a green bond is that the funds raised through its issuance are earmarked for projects that have positive environmental or climate-related impacts.

A secured bond is a type of debt security issued by governments, corporations, or other entities to raise capital. What sets secured bonds apart is that they are backed by specific assets or collateral. In the event that the issuer defaults on its payments or obligations, the bondholders have a claim on the designated assets that secure the bond. This collateral provides an added layer of protection for investors, as it reduces the risk of loss in case the issuer faces financial difficulties.

A senior unsecured bond is a type of debt security issued by governments, corporations, or other entities to raise funds. It falls within the category of bonds that are not backed by specific collateral or assets. Instead, the repayment of these bonds relies solely on the general creditworthiness and financial strength of the issuer.

“Senior” refers to the bond’s position in the hierarchy of creditor claims. In the event of the issuer’s default or bankruptcy, senior bondholders have a higher priority compared to other classes of bondholders. This means that if the issuer’s assets are liquidated to pay off its debts, senior bondholders are among the first to be repaid from the available funds.

“Unsecured” indicates that the bonds are not tied to specific assets or collateral. Unlike secured bonds, which have specific assets backing them, senior unsecured bonds are issued based on the issuer’s overall creditworthiness and ability to repay.

Mezzanine finance is a hybrid form of financing that sits between equity and senior debt in a company’s capital structure. It serves as a way for companies to raise capital for various purposes, such as expansion, acquisitions, or refinancing, by combining features of both debt and equity instruments.

Mezzanine financing typically takes the form of subordinated debt, which means it ranks below senior debt in terms of priority for repayment in case of default or bankruptcy. Mezzanine lenders agree to provide capital to a company with the understanding that their loans will be repaid after senior debt obligations have been met.

However, what makes mezzanine finance unique is its equity-like features. Mezzanine lenders often receive an equity stake or warrants that give them the option to purchase shares in the borrowing company at a predetermined price. This equity kicker provides potential for higher returns compared to traditional senior debt.