he constant search for investors or financial resources is a real challenge for any company, regardless of the field of activity. Whether it is to finance its development or to avoid debt risks, structured financing is an effective solution that allows you to obtain immediately available income streams. What is structured financing? What are the types and advantages for a company? We answer all your questions.
Structured finance involves transforming existing assets such as loans or receivables into financial securities that can be traded on the markets. This process is a solution that allows credit or debt risks to be distributed to new investors.
Concretely, the el salvador phone data structured financing procedure begins with the creation of a portfolio. This involves grouping the company's assets together after assessing their risk of default. Then, securitization makes it possible to put tranches of credits on the market or on the stock exchange according to criteria such as their repayment priority, the risks of borrower defaults, etc. The provision of securities then allows investors to build a portfolio of shares according to the rates of return, while taking into account their investment potential.
The aim of structured financing is therefore to minimise credit risks by spreading them across the market so that new investors can inject liquidity into the company's assets. This technique has a positive impact on the solvency ratio, but also makes it possible to create immediately available liquid assets.
Since structured financing is a very specific field, its implementation must be carried out by an expert who has technical skills, know-how and certain personal qualities. With regard to technical skills, it is essential to master all the derivative financial products that are essential for the design of structured financing. In addition, the assessment of the value and risks of each of these products makes it possible to adopt the best structured financing strategy in line with the financial situation of the company. Before presenting the project, the expert must also have a deep knowledge of the different financial markets, as well as the overall functioning of interest rates and currencies. These skills then allow him to design financial products perfectly adapted to the situation of the company as well as to the expectations of the managers, but also to those of the investors.
In terms of business skills, the structured finance specialist has a good knowledge of national and international financial regulations. In addition, the accounting and financial analysis of each company allows him to consolidate the negotiation of complex transactions such as structured finance. Finally, he must have communication skills that allow him to explain particularly complex and technical financial concepts to non-specialist audiences.
Finally, the analyst specializing in structured finance within the company must have excellent analytical skills. Indeed, his daily role is to highlight issues that depend entirely on the fluctuation of the financial markets . It is then necessary to have great professional rigor and an ability to work rigorously. He is also required to work in a team with all members of the company's management, but also with banking institutions, investors, and insurers. His level of technicality then allows him to have a certain versatility in this very specific field and for this, targeted training at the center of the specialized organization is essential.
Types of structured finance
Structured acquisition financing
Structured acquisition financing is a financial arrangement that allows the purchase of part or all of a company. Investors can be partners or groups, pooling funds to become shareholders in the company being sold. However, the management team of an existing company can also apply to pool an investment portfolio for the purchase of their own company. In addition, to facilitate the implementation of structured acquisition financing, the assets of the acquired company can be used as collateral with the lending banks. This procedure concerns, for example, buildings in the name of the company, all goods in stock, or furniture, depending on the type of contract signed with the bank, etc.
Structured project financing
In structured project financing, investors use the revenues from the project to repay the loan made to a lending institution. Indeed, as a general rule, these types of financing are done in partnership with large energy infrastructures or public and private institutions. The types of projects concerned can be:
financing the construction of a road;
the project to build a bridge;
the implementation of energy solutions such as power plants or wind farms...
Structured asset financing
Structured asset financing is based on using a pool of available assets as collateral to obtain a loan from a banking institution. For example, this involves securitizing the company's shares to transform them into securities that can be traded on the stock market. Furthermore, as you can see in the MBA Trading training , the company can also use its customer receivables as collateral for a loan. In this case, investors who buy the company's bonds directly receive the interest generated by these credits placed on the market.