Structured Finance; An Innovative Financial Tools

In the recent times, structured finance has become an innovative financial mechanism with numerous advantages for fast-growing large investment projects in energy, infrastructure, heavy industry, agriculture, real estate and tourism, taking into account high flexibility and access to significant resources. One of the innovative financial solutions are structured products, which are a group of financial tools put together are traditional instruments (bonds, stocks, loans) with derivative financial instruments.

Havelet Finance Limited offers a structured finance for a large investment projects, as a set of innovative financial instruments for raising large capital on flexible rate of 2% annually.

Innovative structured Finance Mechanism

The financial strategy for large investment financing overrule all aspects of its development, and alongside plays a vital role in achieving these goals. A company’s investment and financial strategies may be based on traditional financing instruments, but in recent years new solutions have emerged that increase the efficiency of doing business and contribute to increasing its value.

Achieving this goal requires making the right decisions and using tools that precisely match the current market conditions and financial needs of the company. The financial strategy of the business, which covers all aspects of its development, plays a key role in achieving these goals. A company’s investment and financial strategies may be based on traditional financing instruments, but in recent years new solutions have emerged that increase the efficiency of doing business and contribute to increasing its value.

Types, Characteristics of Structured Finance:

Structured finance is a broad group of financial innovations diversified by bond type, debt security, cost of funds raised, rate of return method, investment term, etc. Structured finance for investment projects combines traditional instruments with various derivatives. This means that the financial benefits of the parties depend on changes in a number of market parameters, such as interest rates, exchange rates, commodity prices, etc. Using a combination of several financial instruments, the business gets new opportunities in terms of attracting capital, meeting the expectations of investors.

Structured financial products are offered in the following forms:

• Structured bonds.

• Structured certificates of deposit (SCDs).

• Structured investment certificates,

Among the popular financial instruments are structured deposits, which are divided by the bank into several parts to ensure the safety of the invested funds.

Existing interest in structured finance products encourages many non-financial corporations to consider using this group of financial innovations to raise sources of financing for their activities, including large long-term projects.

Structured Finance; An Innovative Financial Tools

Corporate Structured Products

A hybrid instrument in corporate structured finance products combines several components of the issuing company’s capital. Some hybrid instruments may also contain derivatives in their structure, but they will relate to other products of the same issuer. Investor profits for hybrid instruments depend on changes in one or more variables that are beyond the control of the issuer, such as fluctuations in exchange rates or commodity prices.

Hybrid financial instruments are designed to simultaneously use the advantages of equity and debt instruments. A special type of hybrid are convertible products that are capable of converting borrowed funds into common or special equity instruments.

Corporate financial products are distinguished into structured debt instruments (promissory notes or structured bonds) and so-called hybrid instruments.

Corporate structured products can be based on any assets of the issuing company. In practice, a critical role is played by: • Equity-linked notes. • Commodity-linked notes. • Interest rate-linked notes. • Currency-linked notes. It is explained by the convenience of combining the process of capital raising with the process of business risk management, in particular, capital structure risks, interest rate risks, currency risks and commodity price fluctuations.

Options for Structured Finance in Businesses

Despite the present type of assets on which structured instruments are based, the effect necessarily depends on the results of the operation of issuing classic debt instruments and their placement on the financial market. The most significant opportunities and threats to a company’s financial position related to the use of structured finance to raise capital are presented below.

Structuring allows companies can measure its risk allocation goals (not covered by insurance or hedging) with the needs of investors. A flexible choice of instruments and payment forms allows companies to combine capital raising with effective risk management, which further reduces the cost of risk transfer.

The use of structured finance in a company’s strategy allows it to increase its ability to raise funds from investors who are not interested in buying traditional financial products. The combination of a traditional debt instrument with derivatives provides a reduction in the costs associated with servicing the debt incurred, resulting in a decrease in the weighted average cost of borrowed capital.

Structured finance offers companies numerous advantages stemming from the ability to flexibly shape their capital structure and cash flows.

Structured products bring significant benefits to investors and issuing companies. Today, banks and other financial institutions play a dominant role in the structured finance market, but there are examples of successful non-financial corporations that raise capital by issuing such securities.

If you are interested in structured finance, contact Havelet Finance Limited and discuss the project details with our finance team. We have extensive experience in large projects around the world, and are ready to use our financing capabilities to help your business grow and develop.

Havelet Finance Limited offers the following;
• Long-term investment loans.
• Project finance (PF) scheme.
• Credit guarantees.
• Investment engineering.
• Investment consulting.
• Financial modeling.
• Project management. etc.

We are also currently structuring a convertible debt and loan financing and other project financing and international loans at of 2% interest repayable annually with no early prepayment penalties.

Website: https://www.havelet-finance.com
Email: credit@havelet-finance.com