Prepayment Risk. During periods of declining interest rates, borrowers may prepay principal. This may force the Fund to reinvest in lower yielding securities, resulting in a possible decline in the Fund’s income and distributions. Credit risk. Credit risk is the risk that one or more debt securities in the Fund’s portfolio will decline in price or fail to pay interest or principal when due because the issuer of the security experiences a decline in its financial status. Credit risk is increased when a portfolio security is downgraded or the perceived creditworthiness of the issuer deteriorates. Reinvestment risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed income securities at market interest rates that are below the portfolio’s current earnings rate.
Prepayment Risk. Is associated with the possibility of the issuer paying the capital invested in a product before its scheduled maturity. In this case, the client does not collect the total of the expected return. The issuer's early repayment right is usually provided for in the terms of issuance of the product. Counterparty risk The risk that a settlement will not be made as expected in the context of a transfer system because a counterparty fails to pay or deliver timely, or otherwise fulfill his obligation as expected. This specific risk is higher in the case of countries located in different time zones or using clearing systems not linked to each other.
Prepayment Risk. If interest rates fall, the principal on bonds and loans held by the Fund may be paid earlier than expected. If this happens, the proceeds from a prepaid security may be reinvested by the Fund in securities bearing lower interest rates, resulting in a possible decline in the Fund’s income and distributions to shareholders. Preferred Stock Risk Preferred stocks are unique securities that combine some of the characteristics of both common stocks and bonds. Preferred stocks generally pay a fixed rate of return and are sold on the basis of current yield, like bonds. However, because they are equity securities, preferred stocks provide equity ownership of a company, and the income is paid in the form of dividends. Preferred stocks typically have a yield advantage over common stocks as well as comparably-rated fixed income investments. Preferred stocks are typically subordinated to bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions. Senior Loans Risk The risks associated with Senior Loans of below investment grade quality are similar to the risks of bonds rated below investment grade. Senior Loans, however, are typically senior and secured in contrast to bonds rated below investment grade, which are generally subordinated and unsecured. Senior Loans’ higher standing has historically resulted in generally higher recoveries in the event of a corporate reorganization. In addition, because their interest payments are adjusted for changes in short-term interest rates, investments in Senior Loans generally have less interest rate risk than below-investment-grade rated bonds. The Fund’s investments in Senior Loans are expected to typically be below investment grade. These investments are considered speculative because of the credit risk of their issuers. Such companies are more likely to default on their payments of interest and principal owed to the Fund, and such defaults could reduce the Fund’s net asset value and income distributions. An economic downturn generally leads to a higher non-payment rate, and a debt obligation may lose significant value before a default occurs. Moreover, any specific collateral used t...
Prepayment Risk. In a declining interest rate environment, prepayment of loans and other fixed income instruments with high stated interest rates may increase. In such circumstances, the fund may have to reinvest the prepayment proceeds at lower yields.
Prepayment Risk. The ability of the Issuer to meet its obligations in full to pay principal on each of the Notes on the maturity of each Class of Notes will depend on, inter alia, the amount and timing of payment of principal (including full and partial prepayments) in respect of the SME Receivables and the net proceeds upon enforcement of the Loan Security relating to an SME Receivable and the potential repurchase by the Seller of the SME Receivables. The average maturity of the Notes may be affected by a higher or lower than anticipated rate of prepayments on the SME Loans. The rate of prepayment of SME Loans is influenced by a wide variety of economic, social and other factors, including prevailing market interest rates, changes in tax laws (including, but not limited to, amendments to interest tax deductibility), local and regional economic conditions and changes in Borrower’s behaviour. No guarantee can be given as to the level of prepayments of principal on any SME Loan prior to its scheduled due date in accordance with the provisions for prepayments provided for in the relevant SME Loan Documents (each a Prepayment) that the SME Loans may experience, and variation in the rate of prepayments of principal on the SME Loans may affect each Class of Notes differently. This risk is mitigated by any contractual penalty which may be applicable in the event of a Prepayment (each a Prepayment Penalty) payable by the Borrower. In accordance with Article 9 of the Law of 21 December 2013 regarding the financing of small and medium sized enterprises (the SME Financing Law), a Borrower who entered into a credit agreement after 10 January 2014 may at any time prepay the entire outstanding amount of its SME Loan, provided that:
