Spens clause and Time of supply: Difference between pages

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A potentially strong form of protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors.
''VAT.''
Determines which period a transaction falls within for VAT purposes.


Under a Spens clause the borrower/issuer has to value the cash flows beyond the date of the call/redemption at the government bond yield, or some other low rate.
== See also ==
 
* [[VAT]]
This potentially makes it prohibitively expensive for the issuer to take an early redemption.
 
For example the Bank of England's purchase scheme for corporate bonds favours bonds having a Spens clause.
 
The consequence of a Spens clause for the investor is that they can re-invest the redemption monies in government stock, thus preserving their originally expected cash inflows at lower risk.


== See also ==
* [[Call protection]]
* [[Call risk]]
* [[Loan agreement]]
* [[Make whole clause]]

Revision as of 14:20, 23 October 2012

VAT. Determines which period a transaction falls within for VAT purposes.

See also