Long-term securities other than shares, excluding financial derivatives (F.332)

5.60 Definition:

The sub-position long-term securities other than shares excluding financial derivatives (F.332) consists of all transactions in long-term securities other than shares excluding financial derivatives (AF.332) that is securities other than shares with a long-term original maturity (see paragraph 5.22.) except financial derivatives.

5.61 Long-term securities are generally issued with coupons.

5.62 Sub-position AF.332 includes:

  1. bearer bonds;
  2. subordinated bonds, often referred to as subordinated debt;
  3. bonds with optional maturity dates, the latest of which is more than one year away;
  4. undated or perpetual bonds;
  5. floating rate notes (FRNs);
  6. index-linked securities, where the value of the principal is linked to a price index, the price of a commodity, or to an exchange rate index;
  7. deep-discount bonds and zero-coupon bonds;
  8. eurobonds. A bond issue that is placed simultaneously on the market of at least two countries and is denominated in a currency which need not be that of either, usually through international syndicates of financial corporations of several countries;
  9. privately issued bonds, that is bonds restricted by bilateral agreement to certain investors, if they are at least potentially transferable; if not, they are treated as long-term loans;
  10. loans that have become negotiable de facto. This should be interpreted to mean only if they are traded on an organised secondary market (see paragraph 5.79);
  11. securities resulting from the conversion of loans. A conversion involves two financial transactions: the liquidation of the loan and the creation of the new securities;
  12. debentures and loan stock convertible into shares, whether shares of the issuing corporation or shares of another corporation, so long as they have not yet been converted. A conversion involves two financial transactions: the liquidation of the debenture or loan stock and the share issue. Where separable from the underlying bond, the conversion option should be regarded as a separate financial asset classified in the sub-category financial derivatives (AF.34) (see paragraphs 5.67 a and 5.67 b);
  13. shares or stocks that pay a fixed income but do not provide for participation in the distribution of the residual value of a corporation on dissolution, including non participating preference shares.

5.63 Sub-position AF.332 includes further financial assets issued as part of the securitization of loans, mortgages, credit card debt, accounts receivable and other assets. Sometimes the new security is issued as replacement for the original asset, which is effectively liquidated. Alternatively, the original asset is transferred to another institutional unit and the new securities replace the original asset on the original institutional unit's balance sheet. In this case the original asset should be recorded on the balance sheet of the new institutional unit that holds it.

5.64 Sub-position F.332 does not include:

  1. transactions in securities as part of repurchase agreements. Repurchase agreements are classified in the sub-category other deposits (see paragraph 5.46 f) or in the category loans (see paragraph 5.81 d) depending on the institutional units involved. The stock lent or subject to repurchase does not change balance sheet and remains classified in AF.332;
  2. transactions in non-negotiable securities. They are classified in sub-category long-term loans;
  3. transactions in non-negotiable loans, including those which have been sold to a third party, but for which no organised secondary market exist (see paragraph 5.79).