Borrowing and Financial Strategy

Financial strategy and in depth views of borrowings

What is it about?

This course covers the many different factors that drive a financial strategy, allowing participants to see how such a strategy can be constructed given the many choices available and constraints that could apply.

Using corporate finance theory and an analysis of companies by sector, participants will see the influences on debt strategy in typically larger firms. The course discusses banks and other lenders in detail and examines the influence of real life complexities such as credit ratings, inter-company funding, different types of lender, seniority of debt and the effects of the Credit Default Swap (CDS) market. It also covers the major risks arising from borrowing.

A case study is used to illustrate a range of practical complexities arising from a real life refinancing. Subject to availability, a staff member from a major bank gives a market update for the course.

The course assumes an understanding of the fundamentals of corporate borrowing, as provided in the Principles of Borrowing course.

Programme

The corporate finance background

• • Capital structure
• Leverage, risk and returns
• Credit risk of companies in different sectors and life cycles
• The practical overlay (what really happens)

The view from the lending side

• Banks and Basel II / III
• Bank relationships
• Bond investors
• CDS markets

Markets for borrowing

• Bank market
• Bond market, issuance and retirement
• Other markets, commercial paper, private placement etc

Forms of bank borrowing

• Uncommitted versus committed
• Bilateral versus syndicated/Term versus revolving
• Non bank lenders in public and private markets

The lending contract

• Key issues
• Control of the borrower
• Detailed aspects of documentation
• Financial covenants
• Bank type documents, bond type documents
• High grade, high yield approaches

Credit ratings

• Investment grade versus speculative grade
• The rating process
• Key factors in ratings / ratio analysis
• Credit risk of the lender

Financial strategy

• Liquidity risk
• Legal structures including:
  - intercompany lending
  - project finance
  - joint ventures and minorities
  - subordination / seniority

Case Study – putting it all together
The course concludes with a practical, interactive case study featuring a company raising debt. Participants will work in breakout groups, applying the course content to consider the issues faced by the company and propose and explore alternative funding packages.

How do you benefit?

Building on the Principles of Borrowing course content, Borrowing and Financial Strategy will develop your understanding of the structuring and management of more complex borrowing arrangements and look at how financial strategy, including rating strategy, plays a large part in determining how companies raise borrowed funds.

You will also understand how derivatives can be used to manage some of the risks of debt.

Who is it for?

• CFOs, FDs, corporate treasurers, consultants, relationship managers
• Other financial professionals who are involved in developing financial strategy, or sourcing and structuring corporate borrowings in support of a business strategy.

Trainer

• Will Spinney FCT