Capital Markets

This course may be interesting to bankers who work with Private equity, in Leveraged finance, Debt Capital Markets or other areas facing commodity risks where derivatives may be used for hedging or financing (such as Oil & Gas), and to Financial sponsors.

Private equity firms say lenders are now requiring them to lock in (more of) their interest expense as a condition to lending.  This means using derivatives, typically interest rate swaps.  In the first part of the class, using a model of a deal, we will explore the risk due to interest rate volatility, from the equity sponsor and potential creditors’ view points.  We will look at what interest rate swaps are, and how they may mitigate the deal risks.  We will expand from the LBO case and look at the use of interest rate swaps for other financing risk management as well.  We will also discuss appropriate drafting in debt documentation.  At the end of this first part, participants should have an understanding of the risk due to changing yield curve, sources of data for long-term rates, how to structure a deal with an interest rate swap hedge, and the swap’s pros and cons.  In the second part of the session, we will look at other derivatives which may also prove useful.   The seminar will be part lecture and exercises (so we can see how the derivatives work), culminating in a case study where participants, in teams, will come up with their hedging proposal for a client. 

Class length:  ½ day

This course may be interesting to bankers who work with Private equity, in Leveraged finance, Debt Capital Markets or other areas facing commodity risks where derivatives may be used for hedging or financing (such as Oil & Gas), and to Financial sponsors.

Private equity firms say lenders are now requiring them to lock in (more of) their interest expense as a condition to lending.  This means using derivatives, typically interest rate swaps.  In the first part of the class, using a model of a deal, we will explore the risk due to interest rate volatility, from the equity sponsor and potential creditors’ view points.  We will look at what interest rate swaps are, and how they may mitigate the deal risks.  We will expand from the LBO case and look at the use of interest rate swaps for other financing risk management as well.  We will also discuss appropriate drafting in debt documentation.  At the end of this first part, participants should have an understanding of the risk due to changing yield curve, sources of data for long-term rates, how to structure a deal with an interest rate swap hedge, and the swap’s pros and cons.  In the second part of the session, we will look at other derivatives which may also prove useful.   The seminar will be part lecture and exercises (so we can see how the derivatives work), culminating in a case study where participants, in teams, will come up with their hedging proposal for a client. 

Class length:  ½ day

We leverage off of our expertise in corporate valuation and trading & sales to offer the banker a balanced view on equity and debt origination and placement. We not only focus on valuation, we also discuss the practicalities of markets and how that impacts the placement and cost of capital.

We offer modules in Equity Capital Markets and Debt Capital Markets.

Please ask for detailed outlines.

The challenge for new entrants to trading and sales, besides the theory and terminology, is understanding how the business is run: from how to understand the “morning meeting” where heads of desks give market updates, to the concept of bid-ask and where profit and risk reside, to the aims of clients. To help, we propose wrapping the theory around the bank’s research reports (which can also be understood as proxies for the morning meetings) and around high-volume type of trading strategies. Our approach to teaching valuation is to teach risk identification, that the price of products should be a function of the price of risk management as well as the profit margin. Our approach to sales is to understand the needs of the bank’s client and the risk-reward profile of products to offer solutions. We use current market information, pricing and screen dumps throughout.

We offer modules in Equities, Fixed Income, Credit Fixed Income, Foreign Exchange, and Derivatives.

Please ask for detailed outlines.

The challenge for new entrants to trading and sales, besides the theory and terminology, is understanding how the business is run: from how to understand the “morning meeting” where heads of desks give market updates, to the concept of bid-ask and where profit and risk reside, to the aims of clients. To help, we propose wrapping the theory around the bank’s research reports (which can also be understood as proxies for the morning meetings) and around high-volume type of trading strategies. Our approach to teaching valuation is to teach risk identification, that the price of products should be a function of the price of risk management as well as the profit margin. Our approach to sales is to understand the needs of the bank’s client and the risk-reward profile of products to offer solutions. We use current market information, pricing and screen dumps throughout.

We offer modules in Equities, Fixed Income, Credit Fixed Income, Foreign Exchange, and Derivatives.

Please ask for detailed outlines.

The challenge for new entrants to trading and sales, besides the theory and terminology, is understanding how the business is run: from how to understand the “morning meeting” where heads of desks give market updates, to the concept of bid-ask and where profit and risk reside, to the aims of clients. To help, we propose wrapping the theory around the bank’s research reports (which can also be understood as proxies for the morning meetings) and around high-volume type of trading strategies. Our approach to teaching valuation is to teach risk identification, that the price of products should be a function of the price of risk management as well as the profit margin. Our approach to sales is to understand the needs of the bank’s client and the risk-reward profile of products to offer solutions. We use current market information, pricing and screen dumps throughout.

We offer modules in Equities, Fixed Income, Credit Fixed Income, Foreign Exchange, and Derivatives.

Please ask for detailed outlines.

The challenge for new entrants to trading and sales, besides the theory and terminology, is understanding how the business is run: from how to understand the “morning meeting” where heads of desks give market updates, to the concept of bid-ask and where profit and risk reside, to the aims of clients. To help, we propose wrapping the theory around the bank’s research reports (which can also be understood as proxies for the morning meetings) and around high-volume type of trading strategies. Our approach to teaching valuation is to teach risk identification, that the price of products should be a function of the price of risk management as well as the profit margin. Our approach to sales is to understand the needs of the bank’s client and the risk-reward profile of products to offer solutions. We use current market information, pricing and screen dumps throughout.

We offer modules in Equities, Fixed Income, Credit Fixed Income, Foreign Exchange, and Derivatives.

Please ask for detailed outlines.

The aim of these short product classes, which may be linked together for a full program, is to cover the “20% of information relevant 80% of the time”. Our focus will be practical, putting theory into trading floor context, looking at risk/reward for pricing, client advisory and risk management. They may be useful as continuing education across the bank and new hire training.

The aim of these short product classes, which may be linked together for a full program, is to cover the “20% of information relevant 80% of the time”. Our focus will be practical, putting theory into trading floor context, looking at risk/reward for pricing, client advisory and risk management. They may be useful as continuing education across the bank and new hire training.

The aim of these short product classes, which may be linked together for a full program, is to cover the "20% of information relevant 80% of the time". Our focus will be practical, putting theory into trading floor context, looking at risk/reward for pricing, client advisory and risk management. They may be useful as continuing education across the bank and new hire training.