Is Structured Finance the same as leveraged finance?

Is Structured Finance the same as leveraged finance?

Leveraged Finance teams focus on high-yield, unsecured debt that typically funds transactions such as leveraged buyouts and M&A deals. Structured Finance issues more complex instruments linked to the cash flows of assets, not entire companies, and they may even work with the LevFin team to finance certain deals.

What is the difference between ECM and DCM?

DCM teams deal with debt securities, while ECM teams deal with equity securities. It is only the type of security they trade that makes them different from one another. If you’re interested in DCM teams, make sure to check out our DCM course to learn more about what it is like to invest in the debt capital markets.

What is the difference between leveraged finance and debt capital markets?

The key difference is that DCM focuses on investment-grade debt issuances that are used for everyday purposes, while LevFin focuses on below-investment-grade issuances (“high-yield bonds” or “leveraged loans”) that are often used to fund control acquisitions, leveraged buyouts, and other transactions.

What does leveraged finance do?

Leveraged finance is the use of an above-normal amount of debt, as opposed to equity or cash, to finance the purchase of investment assets. Leveraged finance is done with the goal of increasing an investment’s potential returns, assuming the investment increases in value.

What does a Structurer do finance?

“A structurer saturates themselves with content and attempts to solve problems,” says Steve Wollman, managing director and head of U.S. structuring at Deutsche Bank. “At the most basic level we endeavour to figure out solutions and design products or exposures that meet our clients’ needs.”

What does a Structurer do at a bank?

In finance, a structurer is a person who designs structured products and determines how the pay rules will distribute cash flows for a deal. Structurers will also typically build computer models to mimic the pay rules in order to see how collateral payments affect the bond payments.

Is ECM or DCM better?

DCM issuance is far higher than ECM. Every year, the amount of debt issued globally is typically four or five times higher than the amount of equity issued. In practical terms, this means that the role of ECM and DCM bankers is quite different. “In DCM, there’s a lot more repeat business,” says Rambosson.

Is ECM investment banking?

Investment Banking. We receive many questions about how ECM is “different” from investment banking. The truth is, it is a part of investment banking, and almost all mid-sized and large banks have equity capital markets teams.

Why is leveraged finance interesting?

Leveraged Finance can undoubtedly be more exciting than vanilla corporate lending and vanilla issuance of investment grade bonds. LevFin deals are more sensitive, carry more risk, but most importantly – have a potential for much higher returns. This makes LevFin ideal for the analytical excitement junkie!

What is leveraged finance trading?

Leverage refers to the use of debt (borrowed funds) to amplify returns from an investment or project. Companies use leverage to finance their assets—instead of issuing stock to raise capital, companies can use debt to invest in business operations in an attempt to increase shareholder value.

Why would a company do a leveraged buyout?

Why Do Leveraged Buyouts (LBOs) Happen? LBOs are primarily conducted for three main reasons: to take a public company private; to spin-off a portion of an existing business by selling it; and to transfer private property, as is the case with a change in small business ownership.

Is leveraged finance buy side?

Buy-Side vs. In a leveraged buyout, there is a sell-side and a buy-side. The Buy Side refers to firms that purchase securities and include investment managers, pension funds, and hedge funds. The LBO buy-side entities take up these reports to do their own analysis and make recommendations to their seniors.

How is restructuring different from M & A and leveraged finance?

Unlike M&A, industry groups, ECM, DCM, and Leveraged Finance, Restructuring is more about minimizing losses than maximizing value. That means you need to think like an investor and understand the risk factors in-depth – whether you’re advising the debtor or the creditors.

What does leveraged finance mean in investment banking?

What Is Leveraged Finance (LevFin)? Leveraged Finance (also known as LevFin and LF) is an area within the investment banking division of a bank that is responsible for providing advice and loans to private equity firms and corporations for leveraged buyouts.

What does levfin stand for in leveraged finance?

Leveraged Finance (also known as LevFin and LF) is an area within the investment banking division of a bank that is responsible for providing advice and loans to private equity firms and corporations for leveraged buyouts. Leveraged Finance Group Definition

How does debt refinancing work in leveraged finance?

Refinancings – If a company’s debt is about to mature, it almost always raises new debt to pay off and replace the old balance. Since each deal may be a special case, the analytical work in Leveraged Finance is often more involved than in DCM.