Stronghold solutions can finance targeted investments & activities for sovereign states while providing access to global capital markets at terms otherwise unavailable
Access to Global Capital markets
Where countries have restricted access to global capital markets, Stronghold solutions can - where necessary - address this by enabling a country to “Sovereign Brand” Stronghold designed bonds and thereby issue Economically Defeased instruments carrying a principal and interest obligation guarantee at rates and maturities otherwise beyond a country’s current reach.
The sovereign state can receive the investment from the designated Stronghold Protected Cell as cash in exchange for a dedicated annuity or cash flow. The funds can finance disclosed public or public/private initiatives.
Applications
Stronghold solutions can additionally address a wide range of sovereign interests including:
Maturity extension,
Credit enhancement,
Debt refinancing,
Central bank investment (stakeholder capitalism),
Bank deposit insurance,
Parametric catastrophe insurance;
State Owned Enterprise financing and/or recapitalization;
Long term (up to 30 year) financing at highly competitive fixed rates; &
Public/private project financing.
Capital Market Access
Stronghold solutions expand access to capital. Candidates to purchase Stronghold bonds include:
Development agencies,
In-country institutional investors,
International institutional investors, &
Holders of international offset obligations due to a sovereign.
For In-country institutional investors, Stronghold instruments can provide principal guarantees in USD and returns in local currencies. This solution design provides an inherent currency hedge attractive for in-country institutions.
For, Holders of international offset obligations due to the sovereign, Stronghold solutions provide the only alternative to fulfill offset obligations without reducing the obligation holder’s balance sheet.
Thereby, Stronghold solutions enable those already committed to investment to do more and more investors across the globe to participate.
Stronghold works closely with sovereign states to educate and develop investors to finance state objectives.
Project Financing Features
An investment from a Stronghold designated program has attractive features for projects and developers.
Patient capital - A Stronghold investment needs no debt service or dividends from its investment in a development for up to 3 years. A developer's obligations to a Stronghold investment will accrue, but 3 years gives a project time to get into production, stabilize, and produce cash flow.
Debt or equity - Stronghold has the flexibility to make investments as debt and/or equity.
Cost of capital - Stronghold typically seeks low double digit returns, highly competitive with any sources of capital (e.g., private equity investments) for comparable risk.
No retained equity - Unlike a traditional private equity investment, Stronghold has no requirement to retain equity in a project.
Efficient cost/use of capital - For appropriate projects, a Stronghold investment can take a mezzanine position in a capital stack assuming a subordinated position to a commercial bank lender. The developer can draw down the developer’s equity and the Stronghold investment prior to the project’s need for the commercial bank portion. This approach provides a highly competitive “blended rate” (total cost) of capital.