§2009cc–5 Issuance and Guarantee of Trust Certificates

Summary

The Secretary can issue trust certificates that show ownership of all or part of debentures from a rural business investment company, but only if the certificates come from a Secretary-approved trust or pool made up only of those guaranteed debentures. The Secretary can also guarantee on-time payment of principal and interest on those certificates under whatever terms the Secretary sets. Each guarantee only covers the amount of principal and interest in the trust or pool. Debentures can be paid off early with no penalty. If a debenture is paid off early or defaults, the guarantee is cut back in proportion to that amount. Interest on a prepaid or defaulted debenture is guaranteed only up to the date the guarantee is paid. A trust certificate can be redeemed if all the debentures are prepaid or default. Section 2009g(i) applies to these guarantees. If the Secretary pays a claim, the Secretary gets the rights covered by that payment. No law can stop the Secretary from using ownership rights in a debenture that is in a trust or pool. The Secretary must keep a central register of all trust certificates, can hold bank accounts or U.S. investments to make pools, and can issue certificates to do so. Agents must carry a fidelity bond or insurance to protect the United States. The Secretary may regulate brokers and dealers, and electronic or book-entry registration is allowed.