Hybrid and Mezzanine Finance
Prof. Ian Giddy
New York University
The Course The course will be taught around several major topics employing in-depth group work on case studies, financial analysis and deal documentation. The focus will be on identifying situations that call for nonstandard corporate finance solutions, and the design and pricing of the situation-specific financing instruments. Examples of such situations include balance sheet or capital constraints, private equity and leveraged buyouts, recapitalizations, stress-induced financial restructuring, and arbitrage-driven hybrid debt funding. Structured
products refers to a range of investment instruments designed to
meet
investors' or issuers' special needs or constraints. Hybrid and
equity-linked finance spans the
division
between debt and equity. Companies seek the best of each, while lenders
and investors often demand the security and priority of claims offered
by debt, while expecting some participation on the upside in exchange
for the risks they take. Mezzanine finance,
including warrant bonds, convertible
notes, preferred stock, index-linked securities and others now offer
corporations and banks a means of financing during circumstances when
ordinary techniques fall short. Leveraged financing methods are often
employed in M&A, management
buyouts and other forms of ownership transition, as well as corporate
recapitalizations. The course explains why and when corporations
and financial
institutions
should issue structured notes, hybrid securities, mezzanine funding, leveraged
finance or other forms of structured finance. In three
information-packed days of instruction
and application, we offer an economic cost-benefit analysis of
the techniques, an insight into the corporate finance and pricing
principles, the risks and how they can be managed, methods of cash-flow
modeling, and a roadmap for
choosing
among the alternative forms of these techniques that are employed in
today's capital market.
Who Will Benefit From This Course? The course is of relevance to both potential originators and investors in structured securities: corporate finance officers, commercial and investment bankers, securities analysts; investment officers; corporate treasurers and other individuals whose professional future may be enhanced by an understanding of structured and mezzanine finance techniques. One goal for participants is to develop a check list or rapid overview of the key criteria in a structured finance deal, to consider when analyzing a proposal, so as to grasp the main strengths and risks of each structure after an initial analysis. Materials Participants will be provided with a package of materials useful to the structuring and analysis of specially tailored financing techniques, including pertinent articles, rating agency reports and sample documentation from actual deals done in Europe and elsewhere. The course will include case studies of actual financings, as well as hands-on exercises, and will give participants the opportunity to demonstrate their understanding of deals through presentations and discussions.
Key Issues to be Explored
Pre-Course Reading Outline
of Course
The Instructor Ian Giddy has taught finance at NYU, Columbia, Wharton, Chicago and in 40+ countries worldwide for the past three decades. He was Director of International Fixed Income Research at Drexel Burnham Lambert from 1986 to 1989. The author of more than fifty articles on international finance, he has served at the International Monetary Fund and the U.S. Treasury and has been a consultant with numerous corporations and financial institutions in the U.S. and abroad. As a banker and consultant he has been involved in the growth of the ABS market in the USA, Europe and Asia. He is the author or co-author of The International Money Market, The Handbook of International Finance, Cases in International Finance, Global Financial Markets, Asset Securitization in Asia and The Hudson River Watertrail Guide. He and his wife are the founders of Cloudbridge, a nature reserve in Costa Rica. |