What are Stranded Assets? Stranded assets are assets that are unable to earn their original economic return due to changes in the landscape in which the assets operate. In simpler terms, stranded assets are assets that are worth less than expected. Understanding Stranded Assets Stranded assets are assets that face: Unexpected write-downs Premature write-downs Devaluations…
What is a Sovereign Credit Rating? A sovereign credit rating is an assessment of a country’s creditworthiness. It shows the level of risk associated with lending to a particular country since it is applied to all bonds issued by the government. When evaluating the creditworthiness of a country, credit rating agencies consider various factors such…
What is Sovereign Default? Sovereign default refers to the failure of the government of a sovereign entity to pay back principal and interest payments when they are due. The failure to repay debts owed to creditors may be accompanied by a government’s formal declaration that it will not pay owed debts, or it may sometimes…
What is the Sovereign Fund of Brazil? The Sovereign Fund of Brazil is the country’s government-controlled financial vehicle with different revenue sources, objectives, and investment approaches. It was established to insulate the country from short-term political pressure. Some of the Sovereign Fund of Brazil’s objectives were to fund projects of strategic interest to the country…
What is Sovereign Risk? Sovereign risk is a country’s probability of missing a debt obligation in its present economic status. Sovereign risks come in many forms and pose a considerable challenge to the banking system and a country’s financial stability in general. Strong central banks will impose foreign exchange regulations to reduce the value of…
What is a Sovereign Bond? A sovereign bond is a national government-issued debt security to finance spending programs, cover interests due, or repay old debts. As with other types of bonds, a sovereign bond promises to pay the buyer periodic interest and repay the face value on the maturity date. Its rating is associated with…
What is a Special Needs Trust? A special needs trust is a fiduciary relationship in which persons with developmental disabilities hold legal rights to the benefits of the property contained therein. Individuals planning to convey long-term financial resources to persons with special needs without jeopardizing their eligibility for public benefits resort to using special needs…
What is a Special Employer? A special employer is an employer who borrows an employee from the original employer and to whom the new employee owes a duty. When one employer loans another employer to provide specific services and expertise on loan, a special employment relationship changes the two employers’ roles and responsibilities. The borrowing…
What is a Special Item? A special item is an unusual transaction or event that management discloses separately that is not expected to recur on a regular basis. Special items occur during normal business cycles and are typically reported separately based on management’s judgment. They are used to differentiate normal business transactions from one-time transactions…
