An Overview of Structured Finance by Dmitrij Harder

Structured Financing provides a venue for companies to raise capital via the securitization of assets, equipment, cash flows etc. This securitization, in its most basic construct, creates singular or multiple pools of assets which are assessed a value and then turned into financial instruments which can be bought, sold or transferred. Structured financing products can range in complexity from very simple and straightforward to multi-faceted instruments with multiple moving parts at any given time.

There are several benefits for companies using structured financing methods. These benefits include:

  • The shift in focus from a company’s financial strength to the quality of assets to be securitized – This shift in focus allows companies to raise capital using instruments which carry higher credit ratings than the company itself. This mitigation of risk typically results in better terms for both interest rate and equity concerns.
  • Increased access to capital – Structured financing allows for additional options for the infusion of capital beyond traditional loans and/or equity offerings.
  • Reduced credit concentration – Structured financing can also help to diversify a company’s creditors.

The biggest issue in structured finance is the securitization process, which requires a variety of skill sets to ensure that asset valuation, conditions, and terms pertaining to the final financial instrument are equitable to both the issuing company and the end lender/investor.  Solvo Group can provide the expert assistance required for successful securitization and funding of your company with terms that are competitive across a wide variety of industries.

 

 

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