Introduction

Structured finance and securitization are advanced financial techniques used to manage risk and optimize capital. These techniques allow for the pooling and repackaging of financial assets, creating new securities that can be sold to investors. This 5-day training course will provide participants with an in-depth understanding of structured finance, its components, and the processes involved in securitization. Participants will learn about the structures, risks, legal frameworks, and real-world applications of structured finance and securitization in different asset classes, including mortgages, loans, and receivables.

Course Objectives

• Understand the fundamental principles of structured finance and securitization.
• Learn about the different types of structured products, including asset-backed securities (ABS), mortgage-backed securities (MBS), and collateralized debt obligations (CDOs).
• Gain insights into the structuring, risk assessment, and management of securitized products.
• Understand the legal, regulatory, and accounting considerations in structured finance.
• Explore the impact of structured finance and securitization on financial markets and the economy.
• Learn how to evaluate and invest in structured products.

Who Should Attend?

• Investment professionals, including asset managers, analysts, and portfolio managers.
• Corporate finance professionals and treasurers responsible for risk management and funding.
• Legal and compliance professionals working in the structured finance and securitization sectors.
• Regulators and policymakers involved in the oversight of financial markets.
• Consultants and advisors working in structured finance and investment banking.
• Students and professionals seeking to gain a deeper understanding of structured finance and securitization.

Day 1: Introduction to Structured Finance and Securitization

• Session 1: What is Structured Finance?
  • Definition and core concepts of structured finance.
  • Overview of the types of structured products: Asset-backed securities (ABS), mortgage-backed securities (MBS), and collateralized debt obligations (CDOs).
  • The role of structured finance in capital markets and risk management.
• Session 2: Basics of Securitization
  • Understanding the securitization process: Asset pooling, tranching, and issuance.
  • The key players in the securitization process: Originators, special purpose vehicles (SPVs), issuers, underwriters, and investors.
  • How securitization helps in liquidity management and capital efficiency.
• Session 3: Market Participants and Stakeholders
  • The roles of banks, institutional investors, rating agencies, and regulators in the securitization market.
  • Understanding the investor’s perspective: Risk-return profiles of structured products.
  • Case studies of successful securitization transactions and market failures (e.g., 2008 financial crisis).

Day 2: Asset-Backed Securities (ABS) and Mortgage-Backed Securities (MBS)

• Session 1: Asset-Backed Securities (ABS)
  • Overview of ABS: Types of underlying assets (loans, receivables, credit card debt, auto loans, etc.).
  • The structuring of ABS: How cash flows from underlying assets are used to pay investors.
  • Legal and financial considerations in structuring ABS deals.
• Session 2: Mortgage-Backed Securities (MBS)
  • Introduction to MBS: Residential mortgage-backed securities (RMBS) vs. commercial mortgage-backed securities (CMBS).
  • The process of securitizing mortgage loans and the role of servicers and trustees.
  • Risks and returns in MBS: Prepayment risk, interest rate risk, and credit risk.
• Session 3: Differences Between ABS and MBS
  • Key differences in asset types, structuring, and investor bases.
  • Risk profiles of ABS vs. MBS.
  • How to assess the performance and potential risks of ABS and MBS investments.

Day 3: Collateralized Debt Obligations (CDOs) and Structured Credit Products

• Session 1: Collateralized Debt Obligations (CDOs)
  • Introduction to CDOs: Definition and structure.
  • Types of CDOs: Cash CDOs, synthetic CDOs, and CLOs (Collateralized Loan Obligations).
  • The tranching process and how CDOs are structured to attract different types of investors.
• Session 2: Credit Risk Transfer and CDO Performance
  • How CDOs help transfer and redistribute credit risk.
  • The role of credit rating agencies in CDO structures.
  • Assessing the risks and rewards of investing in CDOs.
• Session 3: Structured Credit Products and Synthetic Securitization
  • Overview of synthetic CDOs and other structured credit products.
  • The use of credit derivatives, including CDS (credit default swaps), in structured finance.
  • The risks and complexities of synthetic securitization.

Day 4: Risk Management, Legal, and Regulatory Aspects of Securitization

• Session 1: Risk Management in Structured Finance
  • Key risks in structured finance: Credit risk, liquidity risk, interest rate risk, and prepayment risk.
  • Techniques for managing risks in structured finance transactions: Hedging, diversification, and stress testing.
  • Risk assessment tools for structured finance products.
• Session 2: Legal Frameworks in Securitization
  • Legal documentation and contract structures in securitization transactions: Offering documents, servicing agreements, and collateral agreements.
  • The role of special purpose vehicles (SPVs) in securitization and bankruptcy remoteness.
  • Legal challenges in securitization and regulatory compliance.
• Session 3: Regulatory and Accounting Considerations
  • Key regulations affecting securitization: Basel III, Dodd-Frank, and European regulations.
  • Accounting treatment of securitization transactions: Off-balance-sheet financing, FASB 140, IFRS 9.
  • The role of the SEC and other regulators in overseeing the securitization market.

Day 5: Securitization Market Trends, Future Opportunities, and Case Studies

• Session 1: Trends in the Securitization Market
  • Evolution of the securitization market post-2008 financial crisis.
  • Innovations in securitization: Green bonds, ESG-linked securities, and blockchain technology.
  • The impact of global economic trends on securitization markets.
• Session 2: Future Opportunities in Structured Finance
  • Emerging sectors for securitization: Renewable energy, healthcare, and student loans.
  • The role of fintech in reshaping structured finance markets.
  • How new technologies and market developments are creating opportunities in structured finance.
• Session 3: Case Studies and Best Practices
  • Real-world examples of successful and failed securitization deals.
  • Lessons learned from the 2008 financial crisis and how markets have evolved.
  • Best practices in structuring, investing, and managing risks in securitization transactions.

Course Conclusion

• Recap of Key Learnings
• Interactive Q&A Session
• Certification of Completion