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INVESTMENT CAPITAL

INVESTMENT CAPITAL. Abundant supply but still risk averse Long terms heighten risk Limited supply of deals – affects liquidity Fewer investors for structured product Limited investor universe for unique contracts Acquisition and contracting poorly understood. DEAL STRUCTURE.

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INVESTMENT CAPITAL

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  1. INVESTMENT CAPITAL • Abundant supply but still risk averse • Long terms heighten risk • Limited supply of deals – affects liquidity • Fewer investors for structured product • Limited investor universe for unique contracts • Acquisition and contracting poorly understood

  2. DEAL STRUCTURE • Complex analysis • Structure • Mixed credits • Unique terms • Often “one-off” • Often lacking “bright lines” • Requires substantial due diligence • Trouble meeting new disclosure requirements

  3. ISSUES • Often no single point of contact • No clear process for resolving problems • Late/missing payments • Early termination or “buy down” • Rating downgrades • Lack of uniformity within asset classes • Limited adjustment to changing financial terms or market conditions

  4. MATCHING ASSET & LIABILITY INVESTOR’S EXPECTATION EARLY TERMINATION SCENARIO Reinvestment at lower rate - 20% of principal and interest Assets TERMINATION Liabilities Assets Liabilities Assets Initial Investment 70% of principal and interest 100% of principal and interest

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