Structured Finance And Securitization

Commercial real estate collateralized debt obligations are collateralized debt obligations backed primarily by commercial real estate loans and bonds. Our group of more than 45 full-time structured finance lawyers draws on our extensive experience with securitization and other finance transactions involving a wide range of asset classes.

  • Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions.
  • Collateralized loan obligations are collateralized debt obligations backed primarily by bank loans.
  • Asset-backed securities are bonds or notes based on pools of assets or collateralized by the cash flows from a specific pool of underlying assets.
  • Over the past 35 years, we have represented issuers, underwriters, trustees, asset managers, servicers, originators, lenders, investors, insurance companies and derivatives providers in structured finance transactions totaling hundreds of billions of dollars.
  • Commercial mortgage-backed securities are for commercial real estate, such as malls or office complexes.
  • Excess interest can be used to offset collateral losses before losses are allocated to bondholders, thus providing another credit enhancement.

Our structured finance practice is ranked nationally in Band 1 by Chambers USA and also ranked nationally in Tier 1 by Legal 500 USA. Additionally, in Asset-Backed Alert’s 2020 league table rankings, Hunton Andrews Kurth ranked second for both underwriter counsel and issuer counsel for US asset-backed securities and mortgage-backed securities. A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions. ISDA conducted market surveys of its Primary Membership to provide a summary of the notional amount outstanding of interest rate, credit, and equity derivatives, until 2010. The ISDA Margin Survey is also conducted annually to examine the state of collateral use and management among derivatives dealers and end-users.

Collaterized Debt Obligations

However, borrowers with greater needs, such as corporations, seek structured finance to deal with complex and unique financial instruments and arrangements to satisfy substantial financial needs. Mortgage-backed securities are asset-backed securities, the cash flows from which are backed by the principal and interest payments of a set of mortgage loans.Residential mortgage-backed securities deal with residential homes, usually single family. Our structured finance attorneys negotiate, structure, and document complex financing transactions to tailor solutions to a client’s specific needs. From straightforward, small-ticket leases to highly sophisticated and complex capital markets transactions, we understand how to effectively and efficiently address all stakeholders’ interests. Ratings play an important role in structured finance for instruments that are meant to be sold to investors. Many mutual funds, governments, and private investors only buy instruments that have been rated by a known credit rating agency, like Moody’s, Fitch or S&P Global Ratings.

structured finance

The decision whether to use a monoline insurer or not often depends upon the cost of such cover vis-a-vis the improvement in pricing for the loan or bond issue by virtue of such credit enhancement. Structured finance is a sector of finance, specifically financial law that manages leverage and risk. Strategies may involve legal and corporate restructuring, off balance sheet accounting, or the use of financial instruments. Agency and Trust is a committed provider of collateralized debt obligation services in the U.S. and Europe in conjunction with Virtus Partners. We pride ourselves on seeking out debt financing opportunities that are underserved by the institutional capital markets.

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Across various industries, making less risky products available to clients that need them.

We collaborate effectively with colleagues in our regulatory, real estate, tax, banking and finance, energy, infrastructure, private equity and bankruptcy practice groups to solve diverse problems and to efficiently staff transactions. Collateralized loan obligations are collateralized debt obligations backed primarily by bank loans. Effective structured finance representation involves more than just efficient transaction execution. An effective structured finance lawyer must understand how each transaction fits the client’s overall business objectives. Hunton Andrews Kurth is one of the nation’s leading structured finance and securitization law firms. For more than 35 years, we have represented clients in connection with mortgage-backed and asset-backed securities offerings and other structured financing matters. We take a multidisciplinary approach involving our attorneys who work in securities law, Uniform Commercial Code, investment management, real estate, bankruptcy, tax, and ERISA law to provide our clients with experienced legal counsel on their most complex and challenging transactions.

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Structured finance transactions are an important funding source and have become increasingly complex and esoteric. Successfully executing these transactions requires advisers who recognize the ways each transaction can best be used within a client’s business objectives. Free Financial Modeling Guide A Complete Guide to Financial Modeling This resource is designed to be the best free guide to financial modeling!

  • Also, many deals, typically those involving riskier collateral, such as subprime and Alt-A mortgages, use over-collateralization as well as subordination.
  • However, borrowers with greater needs, such as corporations, seek structured finance to deal with complex and unique financial instruments and arrangements to satisfy substantial financial needs.
  • Learn financial modeling and valuation in Excel the easy way, with step-by-step training.
  • Many CDOs are collateralized by various types of mortgage-backed securities and other mortgage-related assets.
  • Marketable securities are unrestricted short-term financial instruments that are issued either for equity securities or for debt securities of a publicly listed company.

Get a boost from an industry leader for your asset-backed and mortgage-backed transactions. As one of the largest providers of corporate trust services, we have the resources to help you meet your requirements and support your future needs. We earn top rankings from clients, peers and media and are recognized, particularly, for our facility in handling innovative transactions.

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If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices. If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware. A mortgage is a loan – provided by a mortgage lender or a bank – that enables an individual to purchase a home.

structured finance

We advise corporations, commercial banks, investment banks, and rating agencies on public and private term financing deals and single- and multi-sector conduit securitizations and supply chain financings across asset classes. We are well versed in virtually all types of collateral underlying these transactions, including loan trading, commercial and residential mortgages, aircraft finance, commercial lending, commercial real estate, various types of leasing, all types of debt securities, and derivatives. As the markets have evolved post-financial crisis, we are able to leverage our experienced staff and investment in our people and technology to deliver solutions across virtually every asset class and securitization strategy around the globe. Credit enhancement is key in creating a security that has a higher rating than the underlying asset pool. The subordinate bonds are allocated any losses from the collateral before losses are allocated to the senior bonds, thus giving senior bonds a credit enhancement. As a result, it is possible for defaults to occur in repayment of the underlying assets without affecting payments to holders of the senior bonds. Also, many deals, typically those involving riskier collateral, such as subprime and Alt-A mortgages, use over-collateralization as well as subordination.

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Through our committees and task forces, SFA members exchange ideas, build consensus, and develop holistic solutions based on balanced industry views. SFA represents all participants in a transaction, and our structure ensures we convene all parties and incorporate a broad range of perspectives in our views.

structured finance

Our primary focus is on providing non-recourse, first lien construction loans and asset repositioning loans for acquisition, bridge, debtor-in possession and recapitalization scenarios. For large corporations looking to borrow substantial sums, a collected group of assets and financial transactions may be necessary. There are lending transactions that can’t be done with a traditional financial instrument. Collateralized fund obligations are securitizations of private equity and hedge fund assets.

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While it’s possible to take out loans to cover the entire cost of a home, it’s more common to secure a loan for about 80% of the home’s value. Agency and Trust administration, analytics and operations teams strive to consistently provide innovative solutions and highly competitive investment alternatives for our clients. We have also “written the book” on structured finance, authoring the securitization chapters in the Matthew Bender & Co. treatises Commercial Finance Guide and Equipment Leasing. Other uses include alternative funding , reducing credit concentration and for risk transfer and risk management interest rates and liquidity.

  • Structured finance transactions are an important funding source and have become increasingly complex and esoteric.
  • The subordinate bonds are allocated any losses from the collateral before losses are allocated to the senior bonds, thus giving senior bonds a credit enhancement.
  • Commercial real estate collateralized debt obligations are collateralized debt obligations backed primarily by commercial real estate loans and bonds.
  • Collateralized fund obligations are securitizations of private equity and hedge fund assets.
  • As the markets have evolved post-financial crisis, we are able to leverage our experienced staff and investment in our people and technology to deliver solutions across virtually every asset class and securitization strategy around the globe.

In over-collateralization, the balance of the underlying assets (e.g., loans) is greater than the balance of the bonds, thus creating excess interest in the deal which acts as a “cushion” against reduction in value of the underlying assets. Excess interest can be used to offset collateral losses before losses are allocated to bondholders, thus providing another credit enhancement.

Passage of the legislation, which has broad regulatory and industry support, will provide a solution for tough legacy contracts that have insufficient fallback language and create a safe harbor from litigation. Structured finance transactions require a financially sound partner that understands and responds to your needs. From deal closing to ongoing account administration, we provide dedicated support from experienced professionals.

Collateralized mortgage obligations are securitizations of mortgage-backed securities, typically involving multiple classes with differing levels of seniority. Commercial mortgage-backed securities are for commercial real estate, such as malls or office complexes. It provides the scaffolding and space for major borrowers needing a capital injection or alternative source of financing when other, more traditional borrowing options won’t work. Insurance linked securities are risk transfer instruments linked to insurance losses due to catastrophic events, which are generally seen as uncorrelated to traditional financial markets. Credit derivatives are contracts to transfer the risk of the total return on a credit asset falling below an agreed level, without transfer of the underlying asset.

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