Course dates
Course overview
Today’s global capital markets are undergoing a period of profound re-alliance. Many market participants have disappeared or been restructured. Governments and Central Banks are playing an unprecedented policy role in reshaping the investment and financing landscape. Against this backdrop of change, an altered array of investment alternatives is emerging.
'How the Financial Markets Work' is the course that examines government debt issues, corporate securities and euro-markets and their startling changes in value this past year.
You will learn how various securities are constructed, the risks they pose, how to value them, how they interrelate, and about the timing of their issuance. The process of selling government and corporate securities is described step by step. Delegates will learn how companies are valued, how their shares are distributed, and how returns on equity can be measured. The course also looks at securities where equity takes on characteristics of debt - or the reverse.
Summary of course content
- Global short, medium and long term funding and investment alternatives
- Who are the investors and issuers in Asia?
- How is financial intermediation changing?
- Government securities and yield fundamentals; which have held up best?
- How are Central Banks and policy makers reshaping markets?
- Asset and mortgage-backed securities; applications, continuing concerns
- Changing role for credit rating agencies?
- Valuing debt and equity securities in volatile markets
- Convertibles and debt with warrants
- Futures, forwards, swaps and options and their applications
- Understanding foreign exchange volatility
- What is the future of credit derivatives?
Methodology
Active participation is encouraged to ensure understanding and reinforce concepts. You will be provided with complete lecture notes, cases, and selected readings to serve as a reference.
Who should attend this training course?
- Bankers and other securities professionals
- Lawyers
- Risk managers
- Credit professionals
- Operational and back-office staff
- Financial journalists
- Other professionals working in the finance fields related to finance
Supporting publications:
Day 1
Themes: overview of capital markets; government securities and money markets; role of rating agencies
Global capital markets: an overview
- Forces of change and the challenge of volatility in Asian markets
- Broadening the range of financing alternatives
Risk, return and expectations
- How financial markets determine price
- Efficient markets and rational expectations?
- The influence of rating agencies on country risk and other ratings
The major instruments and how they interrelate
- Money markets vs. bonds and fixed income securities
- Equity markets
- Asset securitsation
- Derivative markets
Government securities and yield curves
- Widely traded sovereign instruments
- Discount and interest bearing securities
- Nominal and effective yields
Interpreting yield curves
- Liquidity and volatility
- Inflation and monetary policy
- "Riding the Yield Curve"
- Implied forward rates
Central banks and capital markets
- Central Banks and inflation
- Tools for policy implementation
- Watching Central Banks for rate movements
Security auctions
Repo agreements
- Repos and reverse repos
- Dealer selection
- Examples of use
Short term funding and investment instruments in domestic and euro-markets
- Negotiable certificates of deposit
- Bankers' acceptances
- Commercial paper
- Role of the rating agencies
- Underwriting process
Day 2
Themes: medium and long-term debt instruments; asset-backed securities
Intermediate funding and investment alternatives
- Bank leveraged loans/syndicated financing
- Primary and secondary markets
- Participations and assignments
- Bond markets
- Publicly traded securities
- Private placements (including U.S. Rule 144A)
- Euro-bonds
Duration
- Calculating duration and modified duration
- Applications in asset liability management
- Modified duration
Workshop: Valuing securities with more than one coupon payment and calculating duration
Asset-backed securities
- Establishing a special purpose vehicle that is bankruptcy remote
- Securitising credit card receivables
- Considering other consumer debt
- Mortgage-backed securites
- Fall-out from sub-prime securitisations?
Case study: Assessing credit risk in an asset-backed transaction
Debt/equity hybrids and uncommon equity
- Convertible debt and debt with warrants
- Valuing these instruments
- Convertible preferred stock
- Uncommon equity with imbedded options
Day 3
Themes: equity markets and share issuance; M&A topics; derivatives
Equity markets
- Issuers and investors
- Underwriting and distribution
- Listing decisions and stock exchanges
Determining stock price: valuing common and preferred shares
- Popular multiples
- Various models for valuation
- Discounting Cash Flows (DCF)
- Using the Capital Asset Pricing Model (CAPM) and betas
Valuing companies for initial public offerings, acquisitions, divestiture, etc.
- Forecasting performance
- Using CAPM
- Weighted Average Cost of Capital (WACC)
Case study: Valuing an acquisition target
Derivative instruments: how they are derived traded and used
- Origins of the markets
- Identifying exposure to price risk
- Hedging vs. insurance products
- Symmetry and asymmetry of risk
Financial Futures and Forward Rate Agreements (FRA's)
- Futures market: brokers, traders and the clearing corporation
- Margin requirements
- Survey of contracts
- Calculating tick values
- FRA's compared to futures
Introduction to swaps
- Product evolution
- Swap applications
- Terminology and quoting conventions
Workshop: Pricing interest rate swaps
- Calculating cash-flows, IRR¡¦s and settlements
- How intermediaries make a market
- Default risk
Day 4
Themes: interest rate options and other price volatility risk management; credit derivatives
Using interest rate options
- Caps floors and collars
- Option pricing considerations
Foreign exchange and international linkages
- Spot, forward and future foreign exchange markets
- How currencies are quoted
Exchange rate determination
- Balance of payments
- Central bank influences
- Purchasing power parity
Cross-currency swaps
- Markets, participants, and role of the intermediary
- Compared to foreign exchange forward contracts
- Combining swaps with other instruments for an all-in lower cost, or improved yield
- Default risk
Currency options
- Definitions and types
- American and European options
- Hedging applications
Credit-Linked Swaps (CDS) and other derivatives
- Hedging against credit downgrade or loss
- Credit Default Swaps (CDS)
- Total Return Swaps (TRS)
- Credit put options
Self-test and wrap-up
Hilton Hotel Singapore, Singapore, Singapore
This programme takes place on a non-residential basis at Hilton Hotel Singapore. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.
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Margaret E. Osius
Ms. Osius specialises in capital markets, risk management, and international project finance. She works with corporations, financial institutions, public agencies, law firms, and private equity investors. She has considerable
professional experience with the oil and gas, power, transport, and telecom sectors.
Ms. Osius began her career at JP Morgan Chase Manhattan Bank, where she structured highly leveraged transactions and project financings and advised clients on foreign exchange and other price risk management strategies. Ms. Osius was responsible for a team of analysts responsible for evaluating the quality of the bank’s global loan portfolio as well as that of its newly acquired affiliates. In that role she had extensive experience with workout and distressed debt. Ms. Osius has published articles in the business press and co-authored several self-study guides covering international project finance, trade and export finance, foreign exchange, and financial futures. The World Bank has published her articles on approaches to financial analysis in emerging markets.
From 2000 to 2007 Ms. Osius was a member of the Technical Advisory Panel (TAP) of the Public Private Infrastructure Advancement (PPIAF) managed by the World Bank. In 2006 and 2007 she was the TAP’s chairperson. The fund provides technical assistance to emerging market governments in order to encourage private involvement in infrastructure development. Ms. Osius received an M.B.A. from INSEAD, the European Institute of Business Administration, in Fontainebleau, France. Her B.A. degree is from Princeton University.
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