Structured Finance (e.g., Project Financing) | Services (2024)

FAQs

Is structured finance the same as project finance? ›

Among structured financing products, project financing is a particular financing method that focuses on your company's actual cash flow rather than on its overall credit strength.

Project financing is a loan structure that relies primarily on the project's cash flow for repayment, with the project's assets, rights, and interests held as secondary collateral. Project finance is especially attractive to the private sector because companies can fund major projects off-balance sheet (OBS).

Project finance is long-term financing of an independent capital investment, which are projects with cash flows and assets that can be distinctly identified. Real estate project finance is a classic example. Other examples of project finance include mining, oil and gas, and buildings and constructions.

The estimated total pay for a Structured Finance Analyst is $135,822 per year, with an average salary of $92,206 per year. These numbers represent the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.

Since the mid-1980s, structured finance has become popular in the finance industry. Collateralized debt obligations (CDOs), synthetic financial instruments, collateralized bond obligations (CBOs), and syndicated loans are examples of structured finance instruments.

The Structured Finance group, is a group within FSO that specializes in addressing varying needs of market participants in the securitization marketplace across asset classes, including asset- backed securities (ABS), commercial mortgage- backed securities (CMBS), residential mortgage- backed securities (RMBS) and ...

Also referred to “debt financing,” a project can be funded by selling bonds to investors. These can be corporate bonds or those issued by municipalities in the public sector.

The process of development of a project consists of 3 stages: pre-bid stage. contract negotiation stage. fund-raising stage.

Financial structure refers to the mix of debt and equity that a company uses to finance its operations. It can also be known as capital structure. Private and public companies use the same framework for developing their financial structure but there are several differences between the two.

Public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects, such as public transportation networks, parks, and convention centers.

How to assess project finance? ›

Analysis of Financial Statements and Structure

The following aspects need to be considered when assessing the financial structure and statements: Debt to equity ratio – A good project would ideally have a low debt-equity ratio which helps in reducing the cost of the debt, thereby increasing the net cash accruals.

Structured Finance refers to securitized assets, whereas Project Finance encompasses all off-balance sheet sources of funding, not only securitized sources.

According to the latest research, the global Structured Finance market size was valued at USD 1724586.98 million in 2022 and is expected to expand at a CAGR of 12.47% during the forecast period, reaching USD 3490976.01 million by 2028.

Securitization is the core of structured finance. It is the method by which those in structured finance create asset pools and ultimately form complex financial instruments that are useful to corporations and investors with special needs.

The Leveraged Finance skill set is more applicable to corporate-level transactions, while Structured Finance is all about asset-level analysis.

In corporate finance, since a project and the borrower's overall operations are merged, a project's failure may adversely affect the company operations. Such is not the case with project finance. A project's performance and management are segregated from the borrower's internal operations.

The typical PPP financial structure, is based on non-recourse or limited recourse project finance techniques, limiting the risk exposure of the investor or promoter of the project, the sponsor. Project finance is based on the financial analysis of the complete life cycle of a project.

Project finance is different from traditional finance because the credit risk associated with the borrower is non-recourse. Unlike the traditional borrowing method, where the borrower bears the entire risk of repayment, in project finance, the borrower's liability to repay is limited.