Description

Structured Finance is how you secure debts against assets or income streams. They are more complicated and involved versions of mortgages so financial markets can enable other funding solutions other than pure debt. They have different ways of securitising against the asset or, if it is a business, against the income stream. They offer complete funding solutions for larger projects and utilise different financial instruments to tailor to the specific project.
Ian will explain points to consider, process startup, setting up finance and the various kinds of structured finance models available. 
KEY TAKEAWAYS

• A significant injection of equity is required for larger capital projects. Only larger financial institutions such as Investment Banks can provide this kind of finance. Structured Finance is not transferable to different debt forms and is specifically tailored per project.
• Structured finance offers many benefits including increasing business reach, handling risks and devising new financial instruments to meet upcoming obstacles. 
• A major assessment is always carried out before granting a Structured Finance offer. The track record of all the entities involved in the project will be a deciding factor as well as risks to be mitigated to the fullest extent possible. 
• The equity stake, provided by separate investors, is long term and returns interest and does not rely specifically on growth in the value of an asset. This means that it is higher risk and thus they require a higher return. 
• A Syndicated Loan is a substantial loan provided for a larger borrower by several joint lenders. This lessens risk and outlay for all members of the syndicate. 
• A Hybrid Security is a single financial security that combines two or more different financial instruments. They combine both debt and equity and are bought and sold via an exchange or broker. 
• A Credit Default Swap is a financial derivative or contract which allows an investor to swap their credit risk with another party. (Often referred to as Hedging). 
• A Collateralised Debt Obligation is a complex structured finance product that is backed by a pool of loans and other assets that is sold to institutional investors. 
• A Collateralised Bond Obligation is a type of structured debt security that has investment grade bonds. They are separated into tranches based on the individual credit risks. They have a fixed date on which they need to be repaid, depending on the risk concerned.
• Collateralised Mortgage Obligations are a mortgage backed security. 

BEST MOMENTS
‘So this is all very much about how we structure something else other than just a pure debt or a pure mortgage, if you like.’
‘Most PPP projects are set up in what’s called a Special Purpose Vehicle, which is a non-recourse company. In other words, it is just set up purely for that transaction and if that transaction goes wrong only that company fails and not the group of companies within which it sits.’
‘The debt will be secured against the property. There will also be other guarantees and collateral covenants of all the different parties. Because we are dealing with commercial entities, those commercial entities will end up giving some sort of guarantees as well.’
‘This is a very complex area of finance. You will need specialist advice in terms of investment banks or merchant banks and specialist accountants doing financial modelling.’ 
VALUABLE RESOURCES
https://www.ianjrogers.com/
ABOUT THE HOST
Ian Rogers is an entrepreneur running businesses in the Real Estate, Construction and Facilities Management arena. Ian has over 40 years’ industry experience, as he was effectively born into construction with his father having his own building company and Ian spending time working on sites from the age of 11!. As a result Ian has seen the industry from a trades person perspective, as a chartered quantity surveyor working on large commercial projects, as a project manager and then working on structured project finance through PFI/PPP deals. This has given Ian a unique whole life approach to any project by considering the end game at the beginning.
CONTACT METHOD
https://www.ianjrogers.com/

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