Structured Finance

Comprehensive coverage of all major structured finance transactions

Structured Finance is a comprehensive introduction to non-recourse financing techniques and asset-based lending. It provides a detailed overview of leveraged buyouts, project finance, asset finance and securitisation.

Through thirteen case studies and more than 500 examples of companies, the book offers an in-depth analysis of the topic. It also provides a historical perspective of these structures, revealing how and why they were initially created. Instruments within each type of transaction are examined in detail, including Credit Default Swaps and Credit Linked Notes. A presentation of the Basel Accords offers the necessary background to understand the regulatory context in which these financings operate.

With this book, readers will be able to:

• Delve into the main structured finance techniques to understand their components, mechanisms and how they compare
• Understand how structured finance came to be, and why it continues to be successful in the modern markets
• Learn the characteristics of financial instruments found in various structured transactions
• Explore the global context of structured finance, including the regulatory framework under which it operates

Structured Finance provides foundational knowledge and global perspective to facilitate a comprehensive understanding of this critical aspect of modern finance. It is a must-read for undergraduate and MBA students and finance professionals alike.

Auteur
Charles-Henri Larreur is an investment banker specialized in structured finance and debt advisory. He is currently a professor at HEC Paris. He holds a Msc in Management from HEC Paris, a Msc in Public Affairs from Sciences Po and a BA in History from Sorbonne University.

Texte du rabat

Comprehensive coverage of all major structured finance transactions Structured Finance is a comprehensive introduction to non-recourse financing techniques and asset-based lending. It provides a detailed overview of leveraged buyouts, project finance, asset finance and securitisation. Through thirteen case studies and more than 500 examples of companies, the book offers an in-depth analysis of the topic. It also provides a historical perspective of these structures, revealing how and why they were initially created. Instruments within each type of transaction are examined in detail, including Credit Default Swaps and Credit Linked Notes. A presentation of the Basel Accords offers the necessary background to understand the regulatory context in which these financings operate. With this book, readers will be able to: Delve into the main structured finance techniques to understand their components, mechanisms and how they compare Understand how structured finance came to be, and why it continues to be successful in the modern markets Learn the characteristics of financial instruments found in various structured transactions Explore the global context of structured finance, including the regulatory framework under which it operates Structured Finance provides foundational knowledge and global perspective to facilitate a comprehensive understanding of this critical aspect of modern finance. It is a must-read for undergraduate and MBA students and finance professionals alike.

Contenu

Preface xix Introduction 1 A Brief History of Structured Finance 1 Defining Structured Finance 4 Why was Structured Finance Set Up? 6 PART I Leveraged Buyout (LBO) 13 CHAPTER 1 What is an LBO? 15 1.1 The Main Features of an LBO 15 1.2 A Three-step Leverage 17 Case Study 1: The Harley-Davidson LBO (1981-1986) 22 CHAPTER 2 The Different Stakeholders 26 2.1 The Target Company 26 2.2 Buyers 35 2.3 Lenders 40 Case Study 2: Michael Milken and the Birth of the High-Yield Bond Market 47 Case Study 3: Malcolm Glazer and the Manchester United LBO 53 CHAPTER 3 The LBO Process 63 3.1 The Sale Process 63 3.2 Exit Strategies 72 3.3 LBO and Private Equity 77 Case Study 4: Hilton Hotels LBO, the Most Profitable Private Equity Deal Ever 85 Summary LBOs: What Have We Learnt? 92 PART II Project Finance 95 CHAPTER 4 The ABC of Project Finance 97 4.1 Definition 97 4.2 Why Choose a Project Finance Structure 99 4.3 Constraints of the Project Finance Structure 103 4.4 How to Choose between Corporate and Project Financing 103 Case Study 5: The Construction of the Eiffel Tower 105 CHAPTER 5 The Main Parties to Project Financing 110 5.1 Different Types of Projects 110 5.2 Sponsors 117 5.3 Lenders 127 5.4 The Role of Public Authorities 140 Case Study 6: The Near Bankruptcy of Disneyland Paris 142 CHAPTER 6 Project Finance Structuring 149 6.1 Preliminary Analysis of the Project 149 6.2 Project Finance Legal Structure 156 6.3 Financial Structure 166 Summary Project Finance: What Have We Learnt? 173 PART III Asset Finance 175 CHAPTER 7 Definition of Asset Finance 177 7.1 The Scope of Asset Finance 177 7.2 How to Finance Assets 178 Case Study 7: Richard Branson and the Beginnings of Virgin Atlantic 196 CHAPTER 8 The Stakeholders 200 8.1 Clients 200 8.2 Lessors 210 8.3 Lenders 222 Case Study 8: The Rise and Fall of GPA Group, the First Giant Aircraft Leasing Company 230 CHAPTER 9 Behind the Scenes 238 9.1 Inside a Leasing Company 238 9.2 Legal Considerations 243 9.3 The Dynamics of Leasing Markets 250 Summary Asset Finance: What Have We Learnt? 254 PART IV Securitization 255 CHAPTER 10 The Securitization Process 257 10.1 Transforming Illiquid Assets into Liquid Securities 257 10.2 Tranching of Securities 258 Case Study 9: The Securitization of David Bowie's Intellectual Property Rights 264 Case Study 10: What is a Covered Bond? 267 CHAPTER 11 The Different Stakeholders 272 11.1 Borrowers 272 11.2 The Originator 274 11.3 Around the SPV: The Transaction's Life 276 11.4 The Investors 280 Case Study 11: The Subprime Crisis 285 Case Study 12: Michael Burry's Big Short 294 CHAPTER 12 Structuring a Securitization 299 12.1 Composition of the Collateral 299 12.2 Managed Transactions 302 12.3 Additional Structuring Considerations 311 Case Study 13: Whole Business Securitization 324 Summary Securitization: What Have We Learnt? 327 Conclusion 329 Structured Finance: What Have We Learnt? 329 A Comparison of Various Types of Structured Finance 330 What is the Future for Structured Finance? 332 Appendix A How Banks Set Interest Rates 336 Appendix B Syndication and Club Deals 341 Appendix C Credit Derivatives 347 Bibliography 350 Acknowledgments 354 Index 357