Tag Archives: Investment Banking

Securitization

Securitization and Structured Finance Basics

Senior Executives, Esteemed Readers, Bankers, Advisors, and even Professional Investment Management across the board in the Banking Space some of our Academics and students have not been thoroughly introduced to Structured Finance and Securitization! I was sitting in the new empty skeleton of a Barndominium we are assembling in a remote Midwest region and I could not help but to think about the many Lawsuites I am having to send out and file currently. It’s ridiculous. And is a learning process. Fact! However this is today’s lesson for anyone wanting to learn more about this topic and especially Students. Let’s Begin with the basics of Structured Finance just like our Favorite Cable Cowboy Book taught us, written by Uncle Dr. John C. Malone.

The IMG describe’s Securitization as “the process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities. The interest and principal payments from the assets are passed through to the purchasers of the securities.” Link to full intersting Basics broken down by the IMF.

Back to basics: What Is Securitization?

International Monetary Fund

Another way to understand Securitization is through Investopedia’s excellent website: It states, “Securitization transforms non-liquid assets into tradeable securities, providing investors with principal and interest returns from diverse assets like mortgage loans and consumer debt. This process of financial integration empowers issuers and offers investors a structured avenue for income generation.” INVESTOPEDIA

Since we got the Basic Understanding of Securitization down on this website let’s explore Structured Finance Basics as well.

Structured Finance Vs. Securitization

It would be correct to think Structured Finance and Securitization are two different topics. According to Mergers and Inquisitions Website Page on the Topic; “The terms “Structured Finance” and “Securitization” are often used interchangeably, but there are some differences.

The main one is that “Structured Finance” is a broader term that may refer to any transaction that uses special-purpose vehicles (SPVs) to add “special features” to loans.

“Securitization” refers to the specific process of pooling together loans, turning them into a security, and selling tranches or “slices” of that security.

So, Project Finance loans issued to fund infrastructure projects such as power plants and toll roads could be considered “Structured Finance” transactions even if they are not securitized.

In this article, we’re not going to distinguish between Structured Finance and Securitization because the everyday usage is so similar.

A proper way to study any subject in Depth is to watch some Lectures from University and Law School. This below is a great lecture on Structured Finance Basics.”

Structured Finance Lecture Cambridge Law School

Securitization

Angel Oak Capital does do a fantastic job laying out basics on Securitization so I shared thier description on the topic here below. Securitization (Structured Finance) – The process of transforming illiquid assets (e.g., mortgages and other loans/leases) into tradable securities, enhancing funding, liquidity, and investor access. It supports credit generation by attracting funding from the capital markets to lenders, enabling more lending than they could otherwise fund from their balance sheets. Securitized products comprise almost a quarter of the U.S. fixed income markets.

Fragmented Types of Securitization

Asset Backed Securities, Collateralized Bond Obligations (CBO’s), Collateralized Debt Obligations (CDO’s), Collateralized Debt Obligations Squared (Essentially Tranched CDO’s or Pizza Sliced Debt Pieces), CDO Cubed (Sliced and Tanched), Collateralized Loan Obligations CLO (Bank Loans from hard Assets), Commercial Mortgage Backed Securities (CMBS), Mortgage Backed Securities, Residential Mortgage Backed Securities. This is a example of Types of Secutities that are securitized in pieces or tranched as we say in Banking.

If anyone can be credited with being a Famous Securitization Genius? That would be Larry Fink of Blackrock. During the 1970’s Mr. Fink ran the Bond Securitization team at First Boston and developed ingenius Financial Products using Pieces of Securitized Mortgages consolidated into different ratings groups for Institutional Fixed income Securities Markets. IT’s highly technical Financial Products inside Investment Law and Investment Banking. And a great subject to study and explore. Did you check out my Post on Mr. FINK HERE?

What are the Advantages of Securitization?

  • Turns illiquid assets into liquid ones
  • Frees up capital for the originator
  • Provides income for investors
  • Small investors can participate

Disadvantages of Securitization …..

  • Investor assumes creditor role
  • Risk of default on underlying loans
  • Lack of transparency regarding assets
  • Early repayment damages investor’s returns

Did you catch the post I wrote a few years ago on Asset Backed Securities?

Structured finance is a sector of finance and financial law — that manages leverage and risk. Strategies may involve off balance sheet accounting, or the use of financial instruments to manage credit risk and facilitate capital flows.

Securitization provides $15.6 trillion in financing and funded more than 50% of U.S. household debt in 2021. Through securitization and structured finance, more families, individuals, and businesses have access to essential credit, seamlessly and at a lower price.[1]

With more than 370 member institutions, the Structured Finance Association (SFA) is the leading trade association for the structured finance industry. SFA’s purpose is to help its members and public policymakers grow credit availability and the real economy in a responsible manner.[2]

ISDA conducted market surveys of its Primary Membership to provide a summary of the notional amount outstanding of interest rate, credit, and equity derivatives, until 2010. The ISDA Margin Survey is also conducted annually to examine the state of collateral use and management among derivatives dealers and end-users. End-User Surveys are also conducted to collect information on usage of privately negotiated derivatives.

Structured Finance and Law

What does a Securitization Lawyer Do?

Attorneys are trained and gain experience to advise clients going through transitions during transaction of growth, taking on added debt, structuring an asset through asset securitization, including giving teams guidance addressing securities, corporate, real estate, tax (REMIC, FASTIT, Debt and Erisa Law guidelines.

Structured Finance Practices in the Law Firms that hold a Monopoly on the Space, do participates in a wide variety of securitized and structured products encompassing almost every asset class in the mortgage, asset-backed, corporate loan, municipal, and structured products markets, including RMBS, CMBS, CLOs, credit card securitizations, auto loan securitizations, equipment securitizations (retail and wholesale), and future flow securitizations. Through our representation of every type of market participant – from major financial institutions and Fortune 500 companies to investment managers and specialty finance companies – we have a breadth of experience that few law firms can offer.

It is several of these Law Firms who have threatned me with Dirty Tricks if I do not stop my ascent into the Investment space. They are literally doing their best to try and intimidate me from moving forward as a Investment Firm Startup. I will be writing a Book about this. Because it is ugly and is unfair. And when people do abuse you and threaten your life and freedom from learning new skills and inuring you? Or United States DOJ and Military will find, fix, and instantly neutralize you. Its been dangerous business writing my blog and learning these skills. Im not afraid of Dying for my upholding my Right as a American. FACT! What they did to me was dirty and very unwelcome. I never knew what was happening. But they continued hurting me for over several years. My body is damaged now from the abuse from some really nasty people who are hiding and sent people to hurt me. But my heart is not yet given up on my goal. And I will march on with bold courage.

Asset Securitization and Origination Process

Getting down into the process and origination of Securitizing Assets is a fairly straight forward process. Just like with any Investment Training it comes down to LAW and who trained you in your field as a Advisor Representative and Investment Professional. No One is entirely self taught. That is a Myth. To really truly understand Origination of Asset Securitization we first need to see how the Government and Law wants this to come together. We would advise if your interested in the actual paperwork and process to read the Asset Securitization Book from the “Comptroller of the Currency of the National Banks”. BOOK HERE.

The Law Firm Slaughter and May makes a excellent description on the tool of Origination and how Lenders and Advisors can use this powerful tool to originate a Asset backed Security. They lead by sharing; Originators can use securitisation to achieve a lower cost of funding than from other debt products and to remove securitised assets from their balance sheet. Securitisation plays an important role in facilitating liquidity and risk management, allowing originators to diversify funding sources, mitigate balance sheet risks and optimise capital allocation. Through unlocking asset value and improving market liquidity, securitisation can contribute to economic growth, facilitate access to capital for businesses and support financial stability.

How do Fixed Income or Debt Advisor’s Put the Funding Together

The way they work is very simple. They Funding Agent of the Bank or the Team putting the funding package together literally pulls capital out of thin air from thier bank, or pitch Institutional Firms on the Offering being put together for Origination and Securitization. If the Advisor is successful and the Debt Offering passes a Due Diligence Investigation? The funding is secured and the transaction gets put together into a Agreement, and Legal Document Package for signing. After the Team of Lending Advisors and Legal Professionals plus Senior level Executives from the Company seeking funding meet and sign paperwork.

The paperwork has already been signed and agreed and shopped into the world of Banks, Debt Lenders, and Private Equity Firms who do collaborate with Debt Originators/Lending Advisors. Meaning? The funding is secured for the Debt Offering for the company seeking the credit. Once the final signatures and the final Transaction is complete? The newly formed Securitzed Paperwork Packet becomes a Marketable Securities Investment Product for Public Investors and sold in the Credit Markets.

There are more ways than one to slice an Orange and Apple. However for todays basics post? This will explain what is needed. Securitization is a space all it’s own in the asset management space. I think this stuff is fun. It’s highly structured.

The Four Types of Securities

The four main types of financial securities are equity, debt, derivatives, and hybrid securities. These instruments represent either ownership, debt, or a contract based on an underlying asset, designed for trading in financial markets to offer income, capital appreciation, or risk management.

Basics of Structured Finance and Securitization Conclusion

I have just shared a full on lecture of some basics within the Securitization Space, and Basics related to Structured Finance. The sad fact is this, I have been bullied to stay out of the space. The stalkers who follow me ran me over with a Jeep in front of Jersey Mikes in June 2025. It shocked me they were trying to kill me. Because I was fully qualified to manage capital, and was learning to program on top of being brutally attacked and pursued in San Francisco, Cupertino, Silicon Valley, and Arizona to Las Vegas and Kansas City. My Body took severe damage fact. They tried to manipulate me using my former GF Qiana as bait. And used her as a harrassment tool using indirect irritation and stalking. Im still in awe they would do dirty things to me.

When a former GF flies across the country to attempt to ambush you in a Hotel lobby unexpectedly? It’s standard practice for any smart human to not take the bait. And not engage anyone you bump into out of having sound security practices. You never know who sent that person. Or it could be even Government Thugs who stalk people from Big Law Firms wanting Information. And they do use Offensive Dirty Hackers to try and obtain that information that could be wrongly construed. Many successful fund managers and writers and entrepreneurs understand what that is like. Ya. No. I am smart enough to keep myself safe. And keep my Manly Urges from being intentionally manipulated by outside Honeypot sources. NOPE! Im not a Soft Target. Don’t even try me. A pretty face and nice body are not easily used to trap me. Keep it moving Hot Honey Lipped Ladies. This man knows you ladies do have devious unspoken intentions most days. Thanks in Advance.

Securitization and Structured Finance has a place in every Corporations Accounting and Finance commitee’s portfolio of tools. Your Investment Advisors can walk you through the origination process and help your Company secure vital funding for growth and in the process improve your Financial Situations using the tools we are trained with. Some Advisors are better than others. The truly good Advisors have secured knowledge from intense self study from multiple Tax, Finance, and Law Skills combined. Your Community and Credit Market Investors are rewarded for hiring Advisors who do have the relationships and who can fund deals quickly. It’s not a a simple subject. But for today? You learned some basics to get you asking some questions and how the basics work for Structured Finance and Securitization. And that was my goal. Thank you for dropping by, If you would like for me to include something here in the post? Let me know! Until next time?

Good Night and Good Luck! JS.

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Business Articles, Corporate Finance, Finance Articles, Investing, Securities

Corporate Secured & Unsecured Debt Securities

Lending Money to Corporations using Corporate Secured and Unsecured Debt Securities could be a risky opportunity for Institutional Lenders and for the Banks and Private Credit Investors. If your not up to date on the legal hierarchy or priority of claims for repayment? Allow me to share that Priority list below. Familiarity with a Corporate Balance Sheet will likely make this list easy for you.

  1. Liquidation/bankruptcy fees and charges – this does not include court fees.
  2. Debts due to preferential creditors – those entitled to certain payments in priority over other unsecured creditors – including wages owed in the four months before the date of the insolvency order, as well as all holiday pay and contributions to occupational pension schemes.
  3. In company cases, any creditor holding a floating charge over an asset, such as a debenture. This is where a class of goods or assets – eg the debtor’s stock – are named as security for a debt.
  4. All unsecured creditors.
  5. Any interest payable on debts.
  6. The shareholders in company cases.

The hierarchy of Credit starts with Secured Creditors then Unsecured Creditors. However for this Post I would like to focus on deliberately on Secured and Unsecured Debt for Institutional Investing. This small list is meant to be used in order and will help Retail Investors, Students, and Business Executives who need to brush up on this topic of interest. As a value investor we are laser focused at looking on a Companies Balance Sheet and focus directly and early on a Companies Solvency. If the company is Debt heavy? This usually indicates we need to consider the use of the Debt in order to make a informed decision on “How we arrive at a Companies Valuation”. If the Company we are investigating has no Debt on the Books? This is a good sign. And tells us as Value Investors “This maybe a very profitable Business to investigate further.”

Secured Debt

Corporate Debt Securities are like any other Loan, and are backed by various types of assets of the issuing Corporation. This list is a Seniority list. Meaning they are Secured Debt options in order.

Mortgage Bonds

Just as a Individual would go to the Bank to ask for a Loan backed by the Home and Land as Collateral for the Mortgage, a corporation will borrow money backed by Real Estate and Physical Assets that belong to the Corporation. If the Corporation fails and is unable to repay the Long Term Debt Obligation “Mortgage Bondholders”. The Assets pledged are liquidated by Court Order when the Corporation is insolvent and goes through the Chapter 7 Bankruptcy process. For further explanation? This video should help.

Equipment Trust Certificates

Interestingly Railroads and Airline companies, finance the acquisitions of their Rolling Stock, Train Rail Cars, Airplanes, by issuing an Equipment Trust Certificate. The Company provides a Down payment of usually 20% Twenty Percent of the cost of the rolling stock, and finances the balance over the course of time. For example, 20 years time. Because equipment has wear and tear from daily use in the operations of the Business, the Railroad will pay off a portion of the loan on an annual basis. Interestingly at no time, theoretically, is the value of the assets (rolling stock, rail-cars,Jet Aircraft) worth less than the amount of the principal remaining on the loan. When the company finishes paying off the loan it receives a clear title for the equipment pledged from the Trustee. If a company does fail to make the payments for the loan? The lender can then repossess the collateral and sells it for his benefit. It’s the same concept of financing a new Car.

Did you catch my post here on: Pooled Investments What you need to know?

Collateral Trust Bonds

Sometimes a Corporation doesn’t have real estate, Equipment, or assets to pledge as collateral for a Mortgage or Loan. Instead the Board of Directors or Management can pledge Company Securities like Stock or other Negotiable Securities from a Parent Corporation into a Trust as a form of secured collateral. This is useful because the Securities are readily liquidated in case of default. Obviously the better quality of Securities deposited as collateral the better the Rating of the Bond. Sometimes these are also referred to as Collateral Trust Certificates.

Unsecured Debt Securities

Debentures

A Debenture is a Debt Obligation of a Corporation backed by only the Corporations word and general creditworthiness. Debentures are written promises of the corporation to pay the principal loan amount back its due date with interest on a regular basis.Debentures surprisingly are not secured by any pledge of property. They are considered safe when the Lender has trust or a credit relationship with the Corporation. This is sort of like a Revolving line of Credit for Commercial Banks and their clients who are the Corporations. Example: Similar to Consumers who use a Bank Credit Card and have great credit worthiness.

Guaranteed Bonds

A Guaranteed Bond is a Bond that is guaranteed as to payment of interest, or both principal and interest, by a corporate entity other than the issuer. The guarantee is only as good and valued if the company providing the guarantee has a strong business. Guaranteed Bonds were popular in the Railroad industry in which Major Railroad Companies sought to ease the trackage rights from a short line Rail lines, and would guarantee the smaller Rail Lines companies debt. A more recent example would be Exxon Mobile Corporation guaranteeing a subordinate companies debt issue.

Senior Debt

This is used to describe the seniority of a Debt Issue. Or the relative priority of repayment claim of a Debt that has been issued. Every preferred stock has a Senior claim to Common Stock. Every Debt security has a senior claim to preferred stock. Secured Bonds have a senior claim to unsecured debt.The term senior securities means bonds and preferred stock, because they have a claim senior to common stock. If you would like to see the Seniority of Debt and Equity? Please refer to the Chart Above below the opening paragraph.

Subordinated Debt

Subordinated Debt is just that! “Belonging to a lower class or rank.” Please refer to above list of Ranked Repayment Obligations.

Credit Ratings

It would be unprofessional of me not to include Ratings and Credit Ratings Agencies in this Post. When evaluationg a Bonds Ratings? You should refer to the Bond Ratings are defined by the Creditworthiness of a Companies Debt. These are issued by Standard & Poors and Moody’s and Jefferies Investment Bank. All these are fantastic Companies who hand Credit Worthiness of Debt Issues and Companies Debt History.

For Credit Ratings This Image Below Will show my Notes on Bond Ratings.

High-Yield Bonds

Since I would have a difficult time explaining in detail High-Yeild Bonds. Investopedia has shared and described High-Yield Bonds as?

High-yield bonds (also called junk bonds) are bonds that pay higher interest rates because they have lower credit ratings than investment-grade bonds. High-yield bonds are more likely to default, so they pay a higher yield than investment-grade bonds to compensate investors.1

Issuers of high-yield debt tend to be startup companies or capital-intensive firms with high debt ratios. However, some high-yield bonds are fallen angels, which are bonds that lost their good credit ratings.

In conclusion I hope you learned a few things about Corporate Secured and Unsecured Debt Securities. In the end Bond Investing can fail. So it’s vital to know the basics of Bonds and Credit. This Wall Street Journal Animated Video should help you understand this fact.

These are basics we use as Investing and Finance professionals. Feel free to share and if you learned something? Fantastic! “

This post is for Educational purposes only. And should not be construed, implied, or taken as Investment Advice.”

Godspeed! Thank You.

JS

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Business Articles, Investment Banking

The Best Investment Banks In Kansas City

Yesterday an Investment Banker from JP Morgan Wall Street in New York City asked me, If I knew who was the top Investment Banks in the Kansas City area? I had to stop myself and ask the same question. The simple truth is? I did not know. So I figured it would be good idea to research the question and find out. Thinking about this in depth? I honestly should know a few of these professionals in case I am ever looking for a specific opportunity, Deal Flow, or advisory referrals. So I started calling around about who’s who? And these are the recommendations that made sense.

Interestingly if I was in New York City we would normally be sharing the large Wall Street Investment Banks as my choices. I have several relationships with many of these Investment Bankers but none are in Kansas City. Normally I would list the top Investment Banks for this Article. Banks like Goldman Sachs, JP Morgan Chase, Bank of America Securities, Morgan Stanley and many more. However since I am not in New York City I must look at the smaller Investment Banks in Kansas City. These are going to be my short list of choices for the short term. Or at least until I am able to meet more of our local Investment Banking Professionals in Kansas City.

Its true the Kansas City area only has a few known local Investment Banks within our community. The first Investment Bank I would like to recommend is our most well known. Interestingly, I have had the privilege of meeting it’s Founder many years ago. It’s founder Mr. G. Kenneth Baum and His family are known supporters of our gorgeous Gallery Nelson Atkins Museum of Art. And the families philanthropy work is known and generous as well. Mr. Baum’s Son is now in Command of the Family Firm and has been leading the firm to a exciting future.

George. K. Baum & Co.

George K. Baum & Co Websiter

Frontier Investment Bank

The second in line is Frontier Investment Bank and for all intensive purposes according to my Business Attorney this small boutique Bank is top notch and the list of Transactions completed long. When experience, leadership, and market research count? Im very positive that if you need your business sold at fair and favorable terms. This is most likely a Investment Bank that can do that for you and help with a long list of Advisory services. I will be reaching out to ask the Lead Sr. Executive and Attorney Mr. Patrick J. Trysla, “How he has built his remarkable team.”

Country Club Finance | CC Capital Advisors

Several weeks ago I opened my Email and found typed out a personal Invitation to attend Country Club Banks CC Capital Advisors State of the M&A market in Kansas City. I sincerely did not know what I was about to find. But when I arrived I met someone who honestly spoke my Language “FINANCE”. And this alone made me think? Maybe this is going to be very interesting. See here’s the thing. For about 2 and 1/2 years I have been basically alone here in Kansas City as a Entrepreneur with a incredibly unlikely story.

Most local Investment Bankers and Finance professionals have zero clue I really am trying my best to learn all about Finance. And most importantly be of service and be valuable for the Finance business community in Kansas City. But the reality is this. I have not been able to capture the interest of this very exclusive community until now.

CC Capital Advisors 1 Ward parkway Kansas City Missouri

Let’s finish with this CC Capital Advisors. I walked in Country Club Bank and dropped my Coat off for this evening reception and events. Immediately I spotted a few older Gentleman who looked like they were the Professionals who knew what they were doing. I immediately could tell they have been to war and won within the Finance community. I was impressed to be able to meet CC Capitals Team. First off to shake my hand was the warm astute Mr. Christianberry who greeted me casually, and next to him was fellow MD’s Mr. Conway and Mr. Hense Jr. who also welcomed me. First things first. I could honestly tell these fella’s are very experienced. It was clear they were literally professionals I should strive to be like. They welcomed be warmly and we talked shop and the current M&A market for about 10 minutes.

One thing that sincerely I should probably share? I am genuinely thankful for the Privilege of meeting these Managing Directors of CC Capital Advisors. I hope one day soon to spend some more time with these fellas. They truly impressed me. The presentation CC Capital Advisors was spearheaded by Stephanie and Mr. Conway. The market of M&A in the Kansas City area, basically confirmed what I have been hearing and seeing from New York Investment Bankers. When the entire Presentation was finished? I sincerely was blown away at the facts and market information I had just reviewed. It was exactly what I had been seeing from my vantage point across the country. These two did a fantastic job. I was again very Impressed.

Please take the time and if your in this small community or interested? I would like to suggest you read the State of M&A in Kansas City provided and written by CC Capital Advisors. They honestly have done a outstanding Job making the information easy to follow. I wish others in other Markets like the South West would be this easy. Here is the link to the Report. PUBLICATION M&A KANSAS CITY

In conclusion I would like to include CC Capital Advisors on this short list of Investment Bankers in Kansas City I would recommend. Its a very small community. And it’s been my experience? If you treat others well? They will be helpful to you as entrepreneur. And if your Investment Bank and Advisory Team have my tough stamp of approval? You must be doing something right.

This list is obviously going to be very short. However within a month or just inside a few weeks? I will be able to expand this short List. Giving a more detailed look at each Investment Bank, listing more Banks that have trust in this space, and what makes them special? As with anything. Highly specialized industry leaders, professionals, financial services and capabilities are the deciding factors who becomes the most influential and trusted Organization within any industry. Please Stay tuned as I meet these professionals and begin listing what makes their firms the choice for you.

What is Kansas City's Best Investment Bank?

According to Investment Group Partner and Notable Kansas City Entrepreneur Kc’s Best Investment Bank is G.K Baum & Co. Sharp chose this on the merits in light of him personally knowing and trusted this Banks Founder. Legendary Financier George Kenneth Baum.

Thank you for reading, and I just need to share this thought. This list will not include local Business Brokers. This listing will be my personal picks of who I trust as a Partner. Since I am on a World Class team of Investment Professionals.
Stay tuned. JS.

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