- resources in finance

Sonnenschein Nath & Rosenthal LLP

  Finance for Lawyers Seminar Series
Prof. Ian Giddy
New York University

Ian Giddy has taught finance at NYU, Columbia, Wharton, Chicago and in 30+ countries abroad for the past two 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. - resources in finance

Money & Credit
This module takes an inside look at commercial banking in a time of transition. Which banks can make money, and how do they provide and price credit? Starting with the basic economics of the characteristics of banks that make them special and subject to specific regulations such as capital requirements, the instructor explores the past and future competitive pressures that are driving the transformation, consolidation and even collapse of many banks at home and abroad. These pressures include the incursion of investment banks into commercial banks' domain, and vice-versa; the ability of banks' corporate clients to raise multicurrency, multimarket debt; the Euro phenomenon; the unbundling of credit risk; and the increasing importance of leveraged lending and equity or quasi-equity financing in M&A activities. The growth of asset-backed securities and other forms of off-balance sheet financing, including project finance, is accorded special treatment.

Course Outline

Day 1
  • Commercial Banking in a Time of Transition (2 hours)
    • Banks vs. Markets
    • Deposits, Reserves and the Fed
    • Moving Money – Domestic and International
    • The Eurocurrency Market
    • Bank Risk, Bank Capital
    • Why Regulate Capital?
    • “Value at Risk”
  • Banks and Credit (2 hours)
    • Asset/Liability Management
    • Loan Pricing—Basis and Margin
    • Transferability of Loans: Off-Balance-Sheet Banking
    • Unbundling of Loan Features
    • Leveraged Lending and Acquisition Financing
    • Lending vs Distribution and Underwriting: How Banks Make Money
    • Case Study: Structuring and underwriting a syndicated loan for acquisition financing
Day 2
  • Asset-Backed Financing (2 hours)
    • Commercial Banks and Securitization
    • The Process: Example of Typical Structure and Cash Flows
    • Legal Prerequisites: Bankruptcy Remote, no or Limited Recourse to Sponsor
    • Accounting Prerequisites: Sale for Accounting Purposes, FAS 140
    • Tax Prerequisites
    • The Impact of Basel II on Bank Capital and the ABS Technique
    • Focus on CLOs and CBOs
    • Focus on Asset-Backed Commercial Paper
    • The Rating Process and Credit Enhancement
  • Project Financing and Future-Flow ABS (2 hours)
    • Non-Recourse Structures
    • Contractual Roles of Sponsor and Other Participants
    • Sources of Funding
    • In-depth Case Study
    • Dealing with Currency, Transfer and Sovereign Risk, and the Securitization of Future-Flow Receivables

A Roadmap for Corporate Finance
This module offers an overview of finance from the perspective of the corporate financial manager. Beginning with the premise that the goal of management is to increase the value of the firm, participants will walk through the key decisions -- investment, financing, and risk management -- that contribute to shareholder value. The investment side will include portfolio selection and management decisions, capital budgeting under risk, and M&A.

The financing side comprises decisions about capital structure -- how much debt, relative to equity is optimal for a particular firm, including regulated financial institutions -- as well as decisions about what kind of debt, and what kind of equity, is right for the firm. Both investment and financing decisions are tied to financial risk management, including the choice of hedging instruments. The third leg will therefore offer insights into how corporations measure and manage interest rate and currency risk, and which instruments best suit their purposes.

Course Outline

Day 1
  • The Corporate Finance Roadmap (2 hours)
    • Investment, Financing and Risk Management
    • Managers' vs. Owners' Interests: Corporate Governance and Incentive Issues
    • A Company in  Nutshell
    • Corporate Performance Metrics
    • Corporate Valuation Drivers
  • Principles of Corporate Investment Decisions (2 hours)
    • Financial Investments
    • Principles of Portfolio Management
    • Capital Investments
    • Mergers, Acquisitions and Divestitures
    • Case Studies: Acquisition and Divestiture Analysis
Day 2
  • Principles of Corporate Financing  (2 hours)
    • Corporate Financing Decisions in Theory and Practice
    • Finding the Optimal Capital Structure: Debt, Equity or Mezzanine?
    • Corporate Taxation and Capital Structure
    • Financing and Corporate Volatility
  • Principles of Corporate Financing:  Debt Structure (1 hour)
    • From "How Much Debt?" to "What Kind of Debt?"
    • Public vs. Private; Long Term vs. Short term; Fixed vs Floating
  • Corporate Financial Risk Management (1 hour)
    • When Should Companies Actively Hedge Financial Risk?
    • Defining and Measuring Financial Risk
    • Tools and Techniques: Derivatives Such as Futures Options and Swaps
    • What Can Go Wrong and Why?

Presentation Slides
Case Studies

Money & Credit

Corporate Finance

Money & Credit

Corporate Finance | | | | contact
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