FinCorp Bonds (Q4 2024)

Get low risk exposure to the real financial market

Introduction Credefi stands at the forefront of blending decentralized finance (DeFi) with traditional financial practices, showcasing unparalleled expertise in creating DEBT financial instruments. The FinCorp Bonds product is designed for established Financial Institutions with proven track records and robust credit portfolios. Through Credefi, these institutions can issue bonds to secure liquidity for their lending operations. Each bond is backed by collateral from active credit portfolios, which undergo comprehensive screening and risk assessment by Experian, ensuring transparency and security.

Why FinCorp Bonds? Direct, Secure Investment: Investors can directly channel their capital into vetted Financial Institutions, offering a secure investment route with competitive returns. Collateralized Structure: The bonds are supported by the issuing institution's balance sheet, creating a safeguard for investors. On-Chain Trading: Bonds are digitized and fractionalized as NFTs, allowing them to be traded, tracked, and managed seamlessly on Credefi’s platform.

The Corporate Bond Proposition Nature of the Bonds Credefi’s Corporate Bonds are plain vanilla debt instruments, offering clear, interest-bearing returns with a fixed maturity. For instance, an investment in a $100,000 bond with a 5% annual yield results in $5,000 interest payouts at designated intervals.

Issuance and Trading Issuers: Only Financial Institutions vetted through Credefi’s risk assessment (validated by Experian) can issue these bonds. NFT Integration: Bonds are issued in NFT tranches, which can be fractionalized and traded, providing democratized access and enhanced liquidity for investors. Investors can claim their coupon payments directly through the Credefi platform.

Operational Framework Risk Assessment and Due Diligence Each participating Financial Institution undergoes rigorous due diligence, including credit scoring by Experian, to verify its ability to fulfill bond obligations. Collateral Valuation Credefi estimates collateral based on the institution’s assets. For example, if Company X holds $5 million in credit assets with a 20% default probability over three years, the maximum bond issuance would be set at $4 million against the collateral to mitigate risk. Return on Investment (ROI) Bonds feature semiannual coupons. In the above example, an initial $4 million issuance results in $5.6 million in total repayments over three years, translating to an ROI of $1.6 million for investors.

Technical Mechanism Tranche Activation For a $4 million bond, Credefi segments it into 8 tranches of $500,000 each. A tranche activates once fully subscribed. NFT Fractionalization Each tranche is represented by an NFT, split into smaller fractions (e.g., 5,000 parts, each valued at $100). This allows investors to purchase smaller portions, making the bonds more accessible. Sales Process When all fractions of a tranche are sold, the tranche is activated, and funds are transferred to the issuing institution. If a tranche isn’t fully subscribed, the collected funds are returned to investors, and no further tranches are offered.

FinCorp Bonds by Credefi combine the rigor of traditional finance with the flexibility of DeFi, providing investors with a secure, high-yield investment that empowers Financial Institutions and supports the broader financial ecosystem.