Structure Finance is a generic term which involves the transfer of risk in non-standard methods using financial products and legal entities. Reasons for using structured finance vary but can include:
- Lowering Funding Costs
- Changing the Composition of the Balance Sheet
- Managing Tax, Accounting and Regulatory Requirements
Securitization is a form of Structure Finance that typically involves the creating a security that is backed by pools of assets, or a portfolio of assets. A goal of securitization is to provide portfolio diversification of assets. Almost any combination of financial assets can be securitized and these include:
- Asset Backed Securities (ABS)
- Mortgage Backed Securities (MBS)
- Collateralized Debt Obligation (CDO)
- Collateralized Bond Obligations (CBO)
- Collateralized Mortgage Obligations (CMO)
- Collateralized Loan Obligations (CLO)
Credit Enhancement involves "enhancing" the credit strength of a transaction, structure and/or vehicle. A variety of capital markets tools are used to improve the credit strength and thereby the credit rating of a transaction, structure and/or vehicle including:
- Credit Derivatives
- Financial Guarantees
- Credit Insurance
- Structure - Special Purpose Entity/Vehicle (SPE or SPV)
CapMarket Consulting has litigation and industry expertise characterizing, valuing and analyzing the risks – credit, market and operations risks – of structured finance, securitization and credit enhanced transactions, structures and/or vehicles.
