Duration: 3 days
- Introduction to Structured Finance
- Structured Finance and the Global Crisis
- Asset Securitization
- CDO’s and Synthetics
- Leveraged and Acquisition Finance
- Management Buy-Outs and Buy-Ins
- Mezzanine Finance
- Structured Credit Products
Like many other areas of finance, “Structured Finance” has suffered a backlash from the financial
crisis that has ravaged global financial markets. However, there is strong political and private
market interest in bringing back to life important financing sources such as “asset securitization”
and “leveraged finance”, and we have already seen the first signs of recovery. Structured Finance”
will undoubtedly survive the crisis – possibly in a simpler form.
The objective of this seminar is to give you a thorough introduction to “structured finance” and a
good understanding of how these financing techniques can be used to finance acquisitions and asset
portfolios and for risk transfer.
We start with a brief introduction to “structured finance” and we give an overview of the different
types of “structured finance” transactions and their uses. We also give an overview of historical
developments – and of the role of “structured finance” transactions in the financial crisis.
We then explain in-depth how “asset securitization” can be used as a financing and risk management
tool. We give an overview of different types of “securitization” transactions and we take a closer
look at the various elements in the structuring of a securitization transaction. We explain the
role of the “Special Purpose Vehicle” (SPV) and discuss the legal aspects in setting up such an
SPV. Further we explain techniques for credit enhancement and for payment management.
We present and explain a number of specific structures: Securities backed by home equity loans and
(the now infamous) “subprime” mortgages, commercial receivables, auto loans, credit card loans. We
also present examples of “future flow” and of “intellectual property” securitizations. In each
case, we explain the main deal features, and we illustrate with real-life case studies. We also
explain the mechanics, pricing and risks of mortgage backed securities and their derivatives.
Further, we look at “Collaterized Debt Obligations” - the securitization of bank loans, bonds and
other financial assets. We explain how these structures are used to transfer risk, to obtain
funding of illiquid asset portfolios, to obtain regulatory relief and to enhance the return on
capital of banks with high funding levels. We give practical, real-life examples of these
structures, and we explain their pricing and risk characteristics. We also discuss how this market
may survive the crisis in a more simplified form.
We then explain how “leveraged finance” is used to fund acquisitions of companies or parts of
companies by an existing internal management team, an external management, or a third party
(acquisition). We also discuss how the financial and structural risks of leveraged financing
transactions can be identified, analyzed and managed and how you can use leveraged loan CDS to gain
or remove exposure to these risks.
Finally, we explain how “mezzanine” finance can used to close the gap between equity and debt
financing. We give examples of typical terms of mezzanine capital and illustrate how it is used to
fund growth opportunities, new product lines, new distribution channels or plant expansions.
Day One
09.00 - 09.15 Welcome and Introduction
09.15 - 12.00 Introduction to Structured Finance
- What is “Structured Finance”?
- Types of Structured Finance Transactions
- The Role of Structured Finance in The Global Financial Crisis
Asset Securitization
- Introduction to Asset Securitization
- Obtaining Financing and Risk Transfer through Securitization
- Types of Securitization Transactions
-
Structuring Securitization Deals
- Setting Up the SPV
- Credit Enhancement Techniques
- Rating of Structured Securities
- Payment Management
12.00 - 13.00 Lunch
13.00 - 16.30 Asset Securitization (Continued)
-
Securitization of Traditional Asset Pools
- Car loans
- Credit card receivables
- Future flows
- Intangible assets
- Case Studies: Recent deals in the aftermath of the crisis
- Asset-Backed Commercial Paper
- Mortgage-backed Securities
-
Mortgage Derivatives
- REMICs, PAC’s, TAC’s and CMO’s
- IO/PO Strips and Inverse Floaters
- Case Studies and Exercises
- Outlook for the Securitization Industry
Day Two
09.00 - 09.15 Brief recap
09.15 - 12.00 Collaterized Debt Obligations
- Concepts of CDO Transactions
- CDOs and the Financial Crisis
-
CDO Structures
- CLOs and CBOs
- Arbitrage/Balance Sheet CDO’s
- Distressed Debt CDO’s
- Synthetic and Hybrid CDO’s
-
Applications of CDO’s
- Yield Enhancement
- Bond Market Arbitrage
- Managing Capital Ratios
- Improving Bank RAROC
- The Future of CDO’s – they Will Survive, but in a Simpler Form
- Case Studies and Exercises
12.00 - 13.00 Lunch
13.00 - 16.30 Leveraged and Acquisition Finance
- Introduction to Leveraged Finance
-
Types of Leveraged Finance Transactions
- Management Buy-Outs/ Buy-Ins
- Leveraged Acquisitions
- Leveraged Build-Ups
- Leveraged Recapitalization
-
Leveraged Loans
- Issuer and Investor Perspectives
-
Valuation in Leveraged Finance
- Asset-Based Approaches
- Comparables-Based Approaches
- Sensitivity analysis
Day Three
09.00 - 09.15 Recap
09.15 - 12.00 Leveraged and Acquisition Finance (Continued)
-
Valuation in Leveraged Finance (Continued)
- Free Cash Flow Approaches (FCFF and FCFE)
- Workshop: Using different approaches to value acquisition target
- The LCDX and LevX Indices
-
Synthetic Leveraged Loans
-
Risks of Leveraged Finance
- Credit risks
- Structural risk
- Interest Rate and FX Risk
- Tax Risks
12.00 - 13.00 Lunch
13.00 - 16.30 Mezzanine Finance
- Mezzanine Finance as an Alternative to Debt and Equity Financing
- Players in the Market for Mezzanine Finance
- Typical Terms of Mezzanine Finance Transactions
- Using Mezzanine Finance in Leveraged Acquisitions
- Case Study
Evaluation and Termination of the Seminar