La Hipotecaria will service the Mortgage Loans and record, manage and process all proceeds related to the Mortgage Loans in its capacity as primary servicer (the Primary Servicer). Upon the occurrence of certain events as described under ?Replacement of Servicer, the Collateral Trustee will be required to remove the Primary Servicer and instruct the Back-up Servicer to assume the role of Servicer.
La Hipotecaria, as assignor (the Assignor) of the assets comprising the Pool of Assigned Mortgages.
Cash management functions with respect to the Collateral Trust have been delegated to the Servicer and the Collateral Trustee in accordance with the terms of the Servicing Agreement and the Collateral Trust Agreement, respectively.
BG Trust Inc. (the Collateral Trustee), a whollyowned subsidiary of Banco General, S.A.
The Covered Bonds are not expected to be listed on the Program Date. There are currently no plans to make an application to list the Covered Bonds on any stock exchange.
The pool of assigned mortgages (the Pool of Assigned Mortgages) will consist of Mortgage Loans (including Dematerialized Mortgage Loans) that have been transferred and assigned to the Collateral Trustee for purposes of securing obligations derived from the Covered Bonds and the Transaction Documents.
The Mortgage Loans comprising the Pool of Assigned Mortgages will be transferred and assigned to the Collateral Trustee pursuant to the LatinClear Third-Party Agreement (in the case of Dematerialized Mortgage Loans), aMortgage Transfer Agreement, or by any other mechanism mutually agreed to in writing by the Grantor and the Collateral Trustee. LatinClear Third-Party Agreement.On or before the Program Date, the Assignor, the Collateral Trustee and LatinClear will enter into the LatinClear Third-Party Agreement, which, among other things, will set forth the procedures pursuant to which the Assignor may, from time to time,legally transfer Dematerialized Mortgage Loans to the Brokerage Account maintained by the Collateral Trustee. In accordance with the LatinClear Procedures, transfers of Dematerialized Mortgage Loans will be effected by book entry. All Dematerialized Mortgage Loans credited to the Brokerage Account will be held in trust by the Collateral Trustee in accordance with, and subject to the provisions of, the Collateral Trust Agreement. See Summary of the Principal Documents?LatinClear Third-Party Agreement. Mortgage Transfer Agreements; Other Mechanisms for Transfer and Assignment.From time to time, the Grantor may wish to transfer and assign Mortgage Loans that are not Dematerialized Mortgage Loans. In such cases, the Grantor and Collateral Trustee may enter into a mortgage transfer agreement (each, a Mortgage Transfer Agreement) substantially in the form of Addendum 4 to the Collateral Trust Agreement. Each Mortgage Transfer Agreement will set forth the procedures pursuant to which certain Mortgage Loans may be transferred and assigned to the Collateral Trustee for purposes of securing obligations derived from each Series of Covered Bonds. Other similar arrangements that are mutually acceptable to the Grantor and the Collateral Trustee may also be used from time to time in order to transfer and assign Mortgage Loans to the Collateral Trustee.
Pursuant to the Servicing Agreement, the Servicer undertakes to service and administer the Mortgage Loans that comprise the Pool of Assigned Mortgages on behalf of the Collateral Trustee and undertakes to take in a timely manner any actions required in order to ensure that the servicing of the Pool of Assigned Mortgages and the other Collateral Trust Assets is conducted in accordance with the collection policies and recovery procedures applicable to the Servicer. See Summary of the Principal Documents?Servicing Agreement.
Pursuant to the Collateral Trust Agreement, the Issuer will be entitled to request the return and/or substitution of Mortgage Loans that comprise the Pool of AssignedMortgagesso long as (i) such request is made in writing (stating the reason for such return and/or substitution), (ii) the Collateral Trustee receives the latest Monthly Servicer Report, and such Monthly Servicer Report certifies compliance with all Pool Ratio Requirements after giving effect to such return and/or substitution and (iii) no Issuer Event of Default has occurred and is continuing.
(i) The Pool Composition Change Ratio Requirement, (ii) the Pool Coverage Ratio Requirement, (iii) the Pool Delinquency Ratio Requirement, (iv) the Pool Direct Discount Ratio Requirement, (v) the Pool Gross Weighted Average Interest Rate Ratio Requirement, (vi) the Pool Liquidation Coverage Ratio Requirement, (vii) the Pool Net Weighted Average Interest Rate Ratio Requirement, (viii) the Pool Percentage of Preferential Interest Rate Mortgages Ratio Requirement, (ix) the Pool Weighted Average Loan to Value Ratio Requirement, (x) the Pool Weighted Average Maturity Ratio Requirement and (xi) the Pool Weighted Average Seasoning Ratio Requirement.
The Pool Composition Change Ratio Requirement will be satisfied so long as the Pool Composition Change Ratio, expressed as a percentage, is greater than or equal to 80%.
The Pool Coverage Ratio Requirement will be satisfied so long as the Pool Coverage Ratio, expressed as a percentage, is greater than or equal to 125%.
The Pool Direct Discount Ratio Requirement will be satisfied so long as the Pool Direct Discount Ratio, expressed as a percentage, is greater than or equal to 85%.
The Pool Gross Weighted Average Interest Rate Ratio Requirement will be satisfied so long as the Pool Gross Weighted Average Interest Rate Ratio, expressed as a percentage, is greater than or equal to the sum of (i) the Outstanding Covered Bonds Weighted Average Interest Rate and (ii) 0.5%.
The Pool Liquidation Coverage Ratio Requirement will be satisfied so long as the Pool Liquidation Coverage Ratio, expressed as a percentage, is greater than or equal to 100%.
The Pool Net Weighted Average Interest Rate Ratio Requirement will be satisfied so long as the Pool Net Weighted Average Interest Rate Ratio, expressed as a percentage, is greater than or equal to the greater of (i) the Outstanding Covered Bonds Weighted Average Interest Rate minus 3.5% and (ii) 1.0%.
The Pool Percentage of Preferential Interest Rate Mortgages Ratio Requirement will be satisfied so long as the Pool Percentage of Preferential Interest Rate Mortgages Ratio, expressed as a percentage, is less than or equal to 80%.
The Pool Weighted Average Loan to Value Requirement will be satisfied so long as the Pool Weighted Average Loan to Value Ratio, expressed as a percentage, is less than or equal to 88%.
The Pool Weighted Average Maturity Ratio Requirement will be satisfied so long as the Pool Weighted Average Maturity Ratio is less than 342.
The Pool Weighted Average Seasoning Ratio Requirement will be satisfied so long as the Pool Weighted Average Seasoning Ratio is greater than or equal to 18.
On or before the Program Date, the Collateral Trustee will open a brokerage account (the Brokerage Account) with an Eligible Brokerage Firm for the purpose of receiving and holding Dematerialized Mortgage Loans in trust that, from time to time, will be assigned and transferred by the Assignor to the Collateral Trust.
The Collateral Trustee will establish and maintain an account (the Reserve Account (Local)) with an Eligible Bank into which it shall deposit $1,000 of the funds received from the Grantor (the Initial Reserve Amount) and into which the Collateral Trustee shall deposit funds received from the Grantor from time to time. The Reserve Account (Local) may or may not yield interest, as determined by the Collateral Trustee. The Grantor may transfer funds from its own account into the Reserve Account (Local) and, upon deposit into the Reserve Account (Local) and receipt by the Collateral Trustee asholder of suchaccount, these additional funds shall be considered part of the Collateral Trust Assets. Once the Collateral Trustee receives confirmation from the Indenture Trustee that the Reserve Account (U.S.) has been opened, the Collateral Trustee shall promptly transfer all funds held in the Reserve Account (Local) (other than the Initial Reserve Amount) from time to time to the Reserve Account (U.S.).
Subject to certain conditions, the Issuer may request that the Indenture Trustee return to the Collateral Trustee (for transfer to the Issuer Account) funds deposited in the Reserve Account (U.S.) that, together with the aggregate sum of all Available Amounts with respect to all outstanding Eligible Letters of Credit, exceed the Reserve Account Required Balance (the Reserve Account Excess). See Summary of the Principal Documents?Collateral Trust Agreement?Accounts & Distribution of Funds?Reserve Account (Local).
Following an Issuer Event of Default and delivery of a Collateral Trustee Notice to Pay (but prior to a Structure Event of Default and delivery to the Collateral Trustee of a Collateral Trustee Liquidation Notice), the Transaction Documents will provide that the Collateral Trustee will, by reference to the Report of Scheduled Paymentsto be prepared by the Indenture Trustee, determine whether the Next Scheduled Payment is greater than the Funds Available Estimate (such difference, if positive, the Estimated Custody Account Deficit Amount). If an Estimated Custody Account Deficit Amount exists, the Collateral Trustee will proceed to sell Random Mortgage Loans such that the sale of such Random Mortgage Loans yields between 120% and 125% of suchEstimated Custody Account Deficit Amount. Pursuant to the terms of the Master Indenture, following the occurrence of a Structure Event of Default,the Covered Bonds of all Series will automatically become due and payable on the next following Accelerated Payment Date and the Indenture Trustee, if so directed in writing by the Holders of at least a majority of the aggregate Principal Amount Outstanding of the Covered Bonds then Outstandingvoting as if they were a single Series and Tranche, will deliver a Collateral Trustee Liquidation Notice to the Collateral Trustee, at which point the Covered Bonds of all Series will automatically become immediately due and payable. Upon receipt of the Collateral Trustee Liquidation Notice, the Collateral Trustee will, in accordance with the Collateral Trust Agreement, immediately proceed to sell and liquidate a portion of, or all of, the Mortgage Loans that comprise the Pool of Assigned Mortgages. See Summary of the Principal Documents?Collateral Trust Agreement?Sale of Collateral Trust Assets.
On or before the Program Date, the Servicer will establish several ledger accounts (the Remittance Accounts), including the Interest Account (to receive all payments of current and past-due interest accrued on Mortgage Loans) and the Principal Account (to receive all payments in respect of principal under the Mortgage Loans). While the Primary Servicer is the Servicer and so long as an Obligatory Interest Remittance Event has not occurred, the Primary Servicer shall be entitled to employ funds in the Interest Account in the normal course of its operations. Upon the occurrence and, if applicable, the continuation of an Obligatory Interest Remittance Event, the Primary Servicer will be required to deliver any funds in the Interest Account to the Collateral Trustee for deposit in the Custody Account within two Business Days of receipt thereof. While the Primary Servicer is the Servicer, the Primary Servicer will be required to deliver any funds in the Principal Account to the Collateral Trustee for deposit into the Custody Account within two Business Days of receipt. If at any time the Back-up Servicer is the Servicer, the Back-up Servicer will be required to deliver any and all funds in the Interest Account and the Principal Account to the Collateral Trustee for deposit into the Custody Account within two Business Days of receipt thereof.
The Collateral Trustee will establish and maintain an account (the Custody Account) within an Eligible Bank into which it will deposit (i) the Initial Contribution and (ii) funds from the proceeds of the Mortgage Loans that form the Pool of Assigned Mortgages and funds from other Collateral Trust Assets. The Custody Account may or may not yield interest, as determined by the Collateral Trustee. So long there is no Obligatory Interest Remittance Condition in effect and the Servicer is not the Back-up Servicer, then, during the period that extends from the first Business Day of each calendar month until (and including) the first Business Day before the Calculation Date of that same month, the Issuer will be entitled to request a return of the funds (excluding the Initial Contribution) on deposit in the Custody Account. Pursuant to the terms of the Collateral Trust Agreement, the Collateral Trustee will be required to release such funds, provided that the following conditions (the Release Conditions) aresatisfied: (x) a request from the Issuer has been delivered to the Collateral Trustee in writing; (y) the request is accompanied by a copy of the Monthly Servicer Report as of the close of the calendar month immediately preceding the forthcoming Calculation Date, and (z) the Monthly Servicer Report indicates that the Issuer will be in compliance with all Pool Ratio Requirements after giving effect to the requested return of such funds.If the Release Conditions are not satisfied, funds deposited in the Custody Account will remain in the Custody Account until one of the following conditions (each, a Disbursement Condition) has been satisfied: (1) the satisfaction of the Release Conditions, (2) written instructions with respect to the disbursement of such funds are received by the Collateral Trustee from the Indenture Trustee, and (3) the funds are otherwise available for disbursement in accordance with the terms of the Collateral Trust Agreement. If either the Obligatory Interest Remittance Condition is in effect or the Back-up Servicer is acting as the Servicer (but prior to the occurrence of an Issuer Event of Default and delivery by the Indenture Trustee of a Collateral Trustee Notice to Pay), then on each Remittance Date, the Collateral Trustee will transfer funds payable to the Indenture Secured Parties (as determined by reference to the Funds Application Report) from the Custody Account (excluding the Initial Contribution and certain other amounts payable to the Local Secured Parties) to the Indenture Trustee for deposit into the Payment Account, to be applied in the order set forth in the Priority of Payments; provided, however, that the excess, if any, remaining in the Custody Account will not be returned to the Issuer unless the Release Conditions are satisfied. If the Release Conditions are not satisfied, funds deposited in the Custody Account will remain in the Custody Account until a Disbursement Condition has been satisfied. Upon the occurrence of an Issuer Event of Default and delivery by the Indenture Trustee of a Collateral Trustee Notice to Pay, the Collateral Trustee will, on each Remittance Date, transferfundsfrom the Custody Account(excluding the Initial Contribution and certain other amounts payable to the Local Secured Parties) that are payable to the Indenture Secured Parties (as determined by reference to the Funds Application Report)to the Indenture Trustee for deposit into the Payment Account, to be applied in the order set forth in the Priority of Payments. Upon the occurrence of a Structure Event of Default (but prior to receipt by the Collateral Trustee of a Collateral Trustee Liquidation Notice), the Collateral Trustee will, on each Collateral Trustee Accelerated Remittance Date, transferfundsfrom the Custody Account (excluding the Initial Contribution and certain other amounts payable to the Local Secured Parties) that are payable to the Indenture Secured Parties, as indicated in the Funds Application Report, to the Indenture Trustee for deposit into the Payment Account, to be applied in the order set forth in the Priority of Payments. Upon the occurrence of a Structure Event of Default and receipt by the Collateral Trustee of a Collateral Trustee Liquidation Notice, the Collateral Trustee will, no later than two Business Days after deposit into the Custody Account, transfer all funds held in the Custody Account (excluding the Initial Contribution and the Withheld Senior Fees and Expenses) to the Payment Account to be applied in the order set forth in the Liquidation Priority of Payments. In addition, on the applicable Remittance Date, the Collateral Trustee will be required todistribute the Indenture Senior Fees and Expenses to the Payment Account, to be applied by the Indenture Trustee in the order set forth in the Priority of Payments. See Summary of the Principal Documents?Collateral Trust Agreement?Accounts & Distribution of Funds.
On or before the Program Date, the Indenture Trustee will establish a single trust account (that may or may not yield interest) that will be designated as the Payment Account, that will be held in trust in the name of the Indenture Trustee for the benefit of the Indenture Secured Parties, and over which the Indenture Trustee will have exclusive control and the sole right of withdrawal. The only permitted withdrawal from or application of funds on deposit in, or otherwise credited to, the Payment Account will be to pay amounts due and payable in accordance with their terms and the provisions of the Master Indenture, each in accordance with the Priority of Payments or the Liquidation Priority of Payments. Funds on deposit in the Payment Account will remain uninvested.
The Covered Bonds will be issued in Series each subject to the terms set out in the relevant Indenture Supplement. Each Series may be comprised of one or more Tranches with different Original Maturity Dates. Save in respect of the first issue, Covered Bonds issued under the Program will either be fungible with an existing Tranche of an existing Series of Covered Bonds (in which case they will form part of such Series and respective Tranche) or have different terms to an existing Series of Covered Bonds (in which case they will constitute a new Series, or a different Tranche as part of that Series).Subject to the satisfaction of certain conditions precedent, the Issuer may issue Covered Bonds without the prior consent of the Holders of any Outstanding Covered Bonds.
With respect to each Series, the Issue Date, the Original Maturity Date, the principal amount, the Issue Price, the interest rateand certain other final terms and conditions for each Tranche forming part of that Series will be set forth in an indenture supplement (each, an Indenture Supplement) which must be read in conjunction with the Master Indenture. In addition, the terms of each Indenture Supplement will be disclosed in an offering circular supplement (each, an Offering Circular Supplement) which must be read in conjunction with this Base Offering Circular.
The Issue Date with respect to a given Series or Tranche will be specified in the applicable Indenture Supplement.
The Issue Price with respect to a given Series or Tranche will be specified in the applicable Indenture Supplement.
Unless otherwise specified in the applicable Indenture Supplement, the applicable Record Date with respect to a given Series or Tranche will be the 15th day of the calendar month immediately preceding the applicable Payment Date unless otherwise specified in the applicable Indenture Supplement.
Unless otherwise specified in the Indenture Supplement, the Covered Bonds of any Series will be issuable in a minimum denomination of $200,000 and integral multiples of $1,000 in excess thereof.
The Covered Bonds will constitute direct, unconditional and unsubordinated obligations of the Issuer, secured by the Collateral Trust Assets. On each Payment Date the Issuer will pay amounts then due and payable under the Covered Bonds.
Payments will be made quarterly, on the 15th day of March, June, September and December of each year (or, if such day is not a Business Day, then the next succeeding Business Day), on any date of early redemption, on the applicable Original Maturity Date, on the applicable Extended Maturity Date or, following a Structure Event of Default (but prior to the delivery of the Collateral Trustee Liquidation Notice), on the 15th day of each month (each such date, an Accelerated Payment Date).
All payments of principal, interest and other proceeds (if any) on the Covered Bonds will be made free and clear of any deduction for Panamanian withholding or substitute taxes, unless such withholding or deduction is required by applicable law. In the event that such withholding, or deduction is required by law, the Issuer (but not the Collateral Trustee) will pay any additional amounts in respect of such withholding or deduction to the extent specified in the Master Indenture. See Taxation in Panama and U.S. Federal Income Taxation for additional information.
The Covered Bonds will rank paripassu and pro rata without any preference or priority among themselves for all purposes (save for the timing of the repayment of principal and the timing and amount of interest payable).
The Collateral Trust Assets will secure the obligations of the Issuer to the Indenture Trustee (as trustee for the Covered Bondholders) and to the Local Secured Parties, up to the amount of the Collateral Trust Assets (or the proceeds of the liquidation thereof), subject to and in accordance with the applicable priority of payments set forth in the Servicing Agreement. If the obligations of the Issuer to the Indenture Trustee (as trustee for the Indenture Secured Parties) and the Local Secured Parties exceed the amount of the proceeds of the liquidation of the Collateral Trust Assets (following application in accordance with the relevant priority of payments), the Indenture Secured Parties and the Local Secured Parties will be unsecured creditors of the Issuer for the amount of the excess.
The Original Maturity Date for each Series will be specified in the relevant Indenture Supplement as agreed between the Issuer and the relevant Dealer. Unless specified otherwise in the Indenture Supplement or redeemed early, the Covered Bonds of each Series will be redeemed at their Outstanding principal amount on the relevant Original Maturity Date. If an Issuer Event of Default has occurred and is continuing and a Collateral Trustee Notice to Pay has been delivered by the Indenture Trustee to the Collateral Trustee, then with respect to each Series of Outstanding Covered Bonds, the relevant maturity date will fall on the date that is 12months following the Original Maturity Date (the Extended Maturity Date).
If so specified in the Indenture Supplement applicable to any given Series of Covered Bonds, upon giving timely notice to the Holders of such Covered Bonds, the Issuer will have the right to redeem all or some of the Covered Bonds of such Series Outstanding on any Optional Redemption Date at the Optional Redemption Amount(s) specified in the applicable Indenture Supplement (such right, a Call Option).
The Rating Agencies or Rating Agency ratingeither the Program and/or the Covered Bonds issued under the Program, together with and the ratings assigned by such Rating Agencies or Rating Agency, will be set out in the applicable Offering Circular Supplement.
The Covered Bonds are not expected to be listed on the Program Date. There are currently no plans to make an application to list the Covered Bonds on any stock exchange.
Euroclear and/or Clearstream, Luxembourg and/or DTC, in relation to any Series of Covered Bonds, or any other clearing system as may be specified in the relevant Indenture Supplement containing the final terms for such Series.
The Collateral Trust Agreement, the Servicing Agreement, the Asset Monitor Agreement, the LatinClear Master Agreement and the LatinClear Third-Party Agreement will be governed by the laws of Panama. The Dealer Agreement, the Master Indenture and the Covered Bonds will be governed by the laws of the State of New York.