Chapter 72. Structured Finance
FRANK J. FABOZZI, PhD, CFA, CPA
Professor in the Practice of Finance, Yale School of Management
HENRY A. DAVIS
Editor, Journal of Structured Finance
MOORAD CHOUDHRY, PhD
Head of Treasury, KBC Financial Products, London
Abstract: Structured finance is a broad field such that not everyone agrees on how it is defined and where the boundaries are. Structured finance should include securitization, leasing, project finance, and complex financing transactions. While derivative contracts alone do not in themselves constitute structured finance, the use of derivatives is one of the features that distinguish large structured financings. Derivatives and securitization are the most fundamental building blocks of structured finance.
Keywords: structured finance, securitization, interest rate derivatives, credit, derivatives, leasing, project financing, asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities (CMBSs), collateralized debt obligations (CDOs), credit default swaps (CDSs), special purpose vehicle, special purpose entity (SPE), embedded exotic options, synthetic transaction
There is no universal definition of structure finance. It is apparent from the way that structured finance teams are organized in banks that the term covers a wide range of financial market activity. We believe a good working definition for structured finance is the following:
... techniques employed whenever the requirements of the originator ...
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