Finance company Frontclear has completed Dominican Republic’s first ever GMRA-documented cross-border repo trade.
The $20 million repo trade — documented under the International Capital Market Association’s Global Master Repurchase Agreement (GMRA) — between Parallax Valores, a Dominican securities firm, and investment banking company Credit Suisse used locally
issued Dominican Republic government bond collateral.
The repo transaction was documented under a standard GMRA 2011 and intermediated by Frontclear subsidiary FCC Securities, which established local custody infrastructure in order to secure title transfer of the collateral.
Frontclear says the successful conclusion of the trade demonstrates the benefits of using international documentation, the importance of clarity around title transfer of collateral and enforceability of GMRA provisions in a close-out scenario.
Frontclear’s investors are largely government-backed institutions that invest in private sector projects in low and middle income countries to promote job creation and sustainable economic growth, and contribute to sustainable development.
Frontclear vice president Daniel Baeza says: “We are proud to have structured a first-of-its-kind cross-border repo transaction using locally issued government bonds as collateral.
“This trade will undoubtedly pave the way for Dominican financial institutions to access long-term offshore funding using existing local [government bonds] that otherwise do not allow for longer tenure stable funding. We believe that this trade sets a benchmark for the development of Dominican Republic’s money market going forward.”
Parval treasury director Pedro Vázquez says: “It’s a great satisfaction for the team to be part of the structuring of such an innovative financing alternative. We are confident that this will have an extremely positive impact in the Dominican market, with this transaction being only the beginning. We look forward to continuing to work with our clients and counterparties in developing a cross-border financing market.”
