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<p>Preface xix</p> <p>Introduction 1</p> <p>A Brief History of Structured Finance 1</p> <p>Defining Structured Finance 4</p> <p>Why was Structured Finance Set Up? 6</p> <p><b>PART I Leveraged Buyout (LBO) 13</b></p> <p><b>CHAPTER 1 What is an LBO? 15</b></p> <p>1.1 The Main Features of an LBO 15</p> <p>1.2 A Three-step Leverage 17</p> <p>Case Study 1: The Harley-Davidson LBO (1981-1986) 22</p> <p><b>CHAPTER 2 The Different Stakeholders 26</b></p> <p>2.1 The Target Company 26</p> <p>2.2 Buyers 35</p> <p>2.3 Lenders 40</p> <p>Case Study 2: Michael Milken and the Birth of the High-Yield Bond Market 47</p> <p>Case Study 3: Malcolm Glazer and the Manchester United LBO 53</p> <p><b>CHAPTER 3 The LBO Process 63</b></p> <p>3.1 The Sale Process 63</p> <p>3.2 Exit Strategies 72</p> <p>3.3 LBO and Private Equity 77</p> <p>Case Study 4: Hilton Hotels LBO, the Most Profitable Private Equity Deal Ever 85</p> <p>Summary LBOs: What Have We Learnt? 92</p> <p><b>PART II Project Finance 95</b></p> <p><b>CHAPTER 4 The ABC of Project Finance 97</b></p> <p>4.1 Definition 97</p> <p>4.2 Why Choose a Project Finance Structure 99</p> <p>4.3 Constraints of the Project Finance Structure 103</p> <p>4.4 How to Choose between Corporate and Project Financing 103</p> <p>Case Study 5: The Construction of the Eiffel Tower 105</p> <p><b>CHAPTER 5 The Main Parties to Project Financing 110</b></p> <p>5.1 Different Types of Projects 110</p> <p>5.2 Sponsors 117</p> <p>5.3 Lenders 127</p> <p>5.4 The Role of Public Authorities 140</p> <p>Case Study 6: The Near Bankruptcy of Disneyland Paris 142</p> <p><b>CHAPTER 6 Project Finance Structuring 149</b></p> <p>6.1 Preliminary Analysis of the Project 149</p> <p>6.2 Project Finance Legal Structure 156</p> <p>6.3 Financial Structure 166</p> <p>Summary Project Finance: What Have We Learnt? 173</p> <p><b>PART III Asset Finance 175</b></p> <p><b>CHAPTER 7 Definition of Asset Finance 177</b></p> <p>7.1 The Scope of Asset Finance 177</p> <p>7.2 How to Finance Assets 178</p> <p>Case Study 7: Richard Branson and the Beginnings of Virgin Atlantic 196</p> <p><b>CHAPTER 8 The Stakeholders 200</b></p> <p>8.1 Clients 200</p> <p>8.2 Lessors 210</p> <p>8.3 Lenders 222</p> <p>Case Study 8: The Rise and Fall of GPA Group, the First Giant Aircraft Leasing Company 230</p> <p><b>CHAPTER 9 Behind the Scenes 238</b></p> <p>9.1 Inside a Leasing Company 238</p> <p>9.2 Legal Considerations 243</p> <p>9.3 The Dynamics of Leasing Markets 250</p> <p>Summary Asset Finance: What Have We Learnt? 254</p> <p><b>PART IV Securitization 255</b></p> <p><b>CHAPTER 10 The Securitization Process 257</b></p> <p>10.1 Transforming Illiquid Assets into Liquid Securities 257</p> <p>10.2 Tranching of Securities 258</p> <p>Case Study 9: The Securitization of David Bowie's Intellectual Property Rights 264</p> <p>Case Study 10: What is a Covered Bond? 267</p> <p><b>CHAPTER 11 The Different Stakeholders 272</b></p> <p>11.1 Borrowers 272</p> <p>11.2 The Originator 274</p> <p>11.3 Around the SPV: The Transaction's Life 276</p> <p>11.4 The Investors 280</p> <p>Case Study 11: The Subprime Crisis 285</p> <p>Case Study 12: Michael Burry's Big Short 294</p> <p><b>CHAPTER 12 Structuring a Securitization 299</b></p> <p>12.1 Composition of the Collateral 299</p> <p>12.2 Managed Transactions 302</p> <p>12.3 Additional Structuring Considerations 311</p> <p>Case Study 13: Whole Business Securitization 324</p> <p>Summary Securitization: What Have We Learnt? 327</p> <p>Conclusion 329</p> <p>Structured Finance: What Have We Learnt? 329</p> <p>A Comparison of Various Types of Structured Finance 330</p> <p>What is the Future for Structured Finance? 332</p> <p><b>Appendix A How Banks Set Interest Rates 336</b></p> <p><b>Appendix B Syndication and Club Deals 341</b></p> <p><b>Appendix C Credit Derivatives 347</b></p> <p>Bibliography 350</p> <p>Acknowledgments 354</p> <p>Index 357</p>

<p><b>Charles-Henri Larreur</b> is an investment banker specialized in structured finance and debt advisory. He is currently a professor at HEC Paris. He holds a Msc in Management from HEC Paris, a Msc in Public Affairs from Sciences Po and a BA in History from Sorbonne University.</p>

<b>A comprehensive coverage of all major structured finance transactions</b><br /><br />The author wrote this book to share his passion for structured finance. What is structured finance? Broadly defined, it is a combination of financial tools that are not off-the-shelf. It is an exciting mix of financial expertise, the occasional use of exotic financial instruments, and the unlimited use of one's imagination. It is a collection of tools creatively put together to make large, complex projects possible. Projects that otherwise would never have been financed. Without it, Gustave Eiffel would never have found the funds to build the Eiffel Tower, Richard Branson would never have started Virgin Atlantic, and Malcolm Glazer would never have bought Manchester United.<br /><br />Structured finance is a powerful engine for global growth. Readers will find in this book real-life examples showing the impact of structured finance all over the world, on all kinds of businesses. Bike lovers can see how structured finance gave Harley Davidson a second life. Those of you longing for a greener world can see how it helps the energy transition. And if you have a passion for donuts, you can see how it allowed for a restructuring of Dunkin Donuts. From leveraged buyouts to project finance, from securitization to asset finance, structured finance is the unseen beating heart of the global economy.<br /><br />Structured finance is also a set of complex debt products. The author analyzes in this book each of the main structured finance techniques and the rationale behind them. He covers the reasons why bankers came up with these financing tools and how the tools differ from each other. He also details the opportunities that structured finance offers companies and banks within the context of regulatory constraints like the Basel Accords. Finally, he shares an analysis of the most recent market trends, highlighting the growing importance of Credit Default Swaps and Credit Linked Notes and explaining how equity and debt funds are reshaping the global financial system.

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