Tavakoli Structured Finance, Inc.
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Consulting Services

Tavakoli Structured Finance, Inc. (TSF) assists clients in maximizing the value of structured financial products and in using structured finance to reduce funding costs. TSF develops opportunistic hedging and revenue strategies. TSF also aids financial institutions in negotiations to quickly achieve satisfactory financial outcomes without legal battles.

 

Expert Witness Testimony

  • Securitization and Special Purpose Entities
  • Securities & accounting fraud, misrating
  • Derivatives including credit derivatives
  • Repos and Total Return Swaps
  • Legitimate and illegitimate uses of structured financial products
Structured Finance: "Correlation" Misleads

Corporate Finance

  • Mergers, Sales, Acquisitions
  • Risk Management – Structured finance, securitization and derivatives issues
  • Bank Balance Sheets - and hidden risks due to structured finance activity

Securitization and Collateralized Debt Obligations (CDOs)

  • Securitization - new product development issues
  • Investors - Fair value and structural protection. Remedies for downgraded or distressed deals.
  • Securities Credit linked notes, convertible bonds, mortgage backed securities, bonds with imbedded derivatives
  • Special Purpose Entiities, SPEs, Special Purpose Vehicles, SPVsStructured finance applications including accounting issues

Credit Derivatives and Traditional Derivatives Par CDS Spread Equation
  • Credit Derivatives – Language, risk management, and value considerations of credit default swaps and total return swaps.

Definition of Structured Finance

Structured finance is a generic term referring to financings more complicated than traditional loans, vanilla bonds and common equity. Relatively simple transactions that lower corporations' funding costs by converting floating rate obligations to fixed rate obligations (or the opposite) through the use of interest rate swaps are traditionally considered structured finance transactions. Financial engineering involving special purpose entities is also considered a part of structured finance. Extremely complicated leveraged products such as constant proportion debt obligations (CPDOs) and complicated securitizations such as collateralized debt obligations of collateralized debt obligations (CDO^n) are also included in the definition of structured finance.

Key motivations for using structured finance include lowering funding costs, changes in debt and equity composition of the balance sheet, taking companies public or private, freeing up balance sheet capacity, monetizing balance sheet assets, financing assets, regulatory capital arbitrage, sheltering corporations from operating liabilities, tax management, financing leveraged buyouts, poison pill takeover defenses, hedge fund speculation, accounting rule compliance and leverage. The structures may address several issues at once including risk transfer, accounting, taxation, bankruptcy and credit enhancement.

Source: Tavakoli, J. Structured Finance & Collateralized Debt Obligations, John Wiley & Sons, 2003, 2008.

Definition of Credit Derivative and Credit Default Swap
Definition of Total Return Swap


"Alternative" Finance Resources

Janet Tavakoli, President: jt@tavakolistructuredfinance.com TEL: (312) 540-0243
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