Investment Banking & Investment Management

Structured Finance: Graduate Area of Work

This line of work gives graduates the chance to become recognised experts early in their careers.
The gradsingapore Team
The gradsingapore Team
Investment banking_Structured finance

A branch of the banking and investment field that specialises in customising financing solutions for companies with unique financial needs, structured finance looks at requirements that fall outside the category of conventional business loans or financial market instruments.

To that end, it can cover a comparatively extensive range of instruments such as debt and equity capital, and even mezzanine financing.

Structured finance works by creating liquidity and “safe” assets from risky instruments for a business organisation. The risk is transferred to different parties involved in the transaction through amounts that are acceptable to them, and with returns proportionate to the extent of risk a stakeholder is willing to stomach.

Financiers start by sussing out specific requirements of a client’s transactions, assets, or projects – all while gaining a good understanding of their risk appetite through rigorous risk analysis.

This involves a thorough examination of all the issues which might affect a transaction, as well as complex modelling of forecasted performance to see how external factors such as commodity prices can influence profitability. Only then can they personalise a suitable combination of debt and other products to help finance the client’s business successfully.

General overview

Hiring managers looking to fill structured finance roles typically draft selected members who demonstrate an aptitude for this area from the organisation’s graduate trainee programmes. However, they do sometimes run recruitment drives to hire graduates directly.

It’s commonly expected for individuals to specialise in a particular area after some time, so some opt to pursue a specialised postgraduate degree before entering the field in order to gain a more solid understanding of their chosen business sector in advance.

Work is usually done in teams of five to 20 people, assembled ad hoc under the leadership of an experienced deal leader for a specific transaction. Most of the time, the deal leader will bring in an eclectic combination of specialists from different sub-sectors so as to get a variety of viewpoints on the issue at hand.

For instance, in the case of a telecommunications team, the team leader will want – among many others – specialists who understand the consumer market, experts on financing the building of communication infrastructure and professionals well-versed in engineering development within the sector and how they affect the industry.

Required skills

As recruiters look for a hunger to win, innovate and find interesting solutions to complex problems, graduates are regularly brought on for their attitude. Training for aptitude is provided, and sector expertise and financial structuring knowledge can be picked up.

Good analytical skills are crucial, as situations have to be dissected quickly and small details caught in order to bring about a creative solution – or jeopardise risk analyses. As there is much client- facing time, good communication skills are also essential here.

Pros & cons

In structured finance, hopefuls can become recognised experts in specific fields or sub-sectors. It’s an area of work for those who enjoy thinking out of the box, having to tailor debt packages and other financing instruments to fit clients’ specific needs.

Overseeing deals from start to finish promises satisfaction. In addition, as graduates normally work in teams, there’s a need to contribute in all aspects, including managing individual processes and finding experts from various areas to help close the project successfully. However, because this area of work is project-based, employees may find their working hours to be uncertain.