Structured Finance 360: From Credit Risk to Asset Swaps

About Course

Course Introduction:

Structured finance is a critical aspect of the modern financial world, providing innovative ways to manage and mitigate risk. This comprehensive course delves into the essentials of structured finance, beginning with an introduction to the field, credit ratings, and credit default swaps, leading to in-depth explorations of securitization, credit derivatives, and advanced financial instruments. Designed for both beginners and experienced finance professionals, the course takes a detailed, practical approach to understanding how structured finance impacts financial markets, businesses, and global economies.

Section 1: Structured Finance 01 – Beginners

This section introduces the fundamental concepts of structured finance. Students will learn about the role of credit ratings, credit default swaps (CDS), and how credit events shape the financial landscape. The course covers the origin of securitization, beginning with an introduction to the process and its connection to financial crises, particularly focusing on the 2008 global financial crisis. Lectures will explore how new financial instruments emerged post-crisis, leading to a deeper understanding of tranching and its role in structured finance. The section concludes with an analysis of different asset classes and the securitization process, highlighting its benefits for financial institutions.

Section 2: Structured Finance 02 – Credit Derivatives

This section moves into more advanced territory with a focus on credit derivatives. It begins with an introduction to the derivative markets and explains how derivatives are used to hedge credit risk. Students will explore the differences between asset-side and liability-side products, and dive deeper into credit default swaps (CDS), understanding their pricing, the calculation of accrued premiums, and the relationship between default probabilities and bond/CDS equivalence. Other key instruments such as credit-linked notes, total return swaps, and basket default swaps are covered in detail, providing students with a comprehensive overview of credit derivatives in structured finance.

Section 3: Structured Finance 03 – Securitization

In the final section, students will focus on the process of securitization, a crucial component of structured finance. The section begins with an exploration of mortgage securitization and introduces the various types of asset-backed securities (ABS). The core concepts of tranching are discussed in depth, as well as the types of assets that are used in securitization. Students will gain practical knowledge of the securitization process, from the initial stages to its final execution, while also learning about the key benefits securitization provides to the financial markets. By the end of this section, students will have a thorough understanding of how securitization works and its importance in structured finance.

Conclusion:

This course equips students with a holistic understanding of structured finance, starting from the foundational concepts to advanced credit derivatives and securitization processes. By completing this course, students will be able to analyze financial markets, manage credit risk through structured finance tools, and better understand the mechanisms that shape global finance.

What Will You Learn?

Introduction to Structured Finance – Understand the essential principles and the role structured finance plays in global markets.
Credit Rating and Credit Risk – Learn about the importance of credit ratings, credit events, and the mechanisms of credit risk management.
Credit Default Swaps (CDS) – Dive into credit default swaps, their definitions, pricing, and practical applications in managing default risk.
Securitization – Explore the process of securitization, including asset types, tranching, and the benefits of structuring assets into marketable securities.
The 2008 Financial Crisis – Analyze the causes, key events, and long-lasting impact of the 2008 financial crisis on structured finance markets.
New Financial Instruments – Discover post-crisis financial instruments and innovations in the structured finance space.
Advanced Credit Derivatives – Master complex credit derivatives such as total return swaps, asset swaps, and basket default swaps.
Securitization Process – Get a step-by-step breakdown of the securitization process, its components, and its risks and rewards for investors.

Material Includes

6 hours on-demand video
Access on mobile and TV

Requirements

Basic Knowledge of Finance – Familiarity with fundamental finance concepts such as bonds, interest rates, and financial markets.
Understanding of Risk Management – A basic grasp of financial risk management, especially credit and market risk, will be beneficial.
Quantitative Skills – Proficiency in mathematical concepts such as probability, statistics, and basic financial mathematics.
Familiarity with Derivatives – Some prior exposure to financial derivatives (e.g., options, futures) is helpful but not mandatory.
Analytical Mindset – The course involves analyzing complex financial instruments and markets, so an analytical approach will support the learning process.

Target Audience

Finance Professionals – Individuals working in banking, investment management, or financial institutions who want to deepen their knowledge of structured finance and credit derivatives.
Risk Managers – Professionals involved in managing financial risk, particularly credit risk, who wish to enhance their understanding of complex financial products.
Analysts and Consultants – Those working as financial analysts, credit analysts, or consultants seeking to expand their expertise in structured finance.
Students of Finance and Economics – Graduate or advanced undergraduate students looking to specialize in structured finance or pursue careers in investment banking, credit rating agencies, or financial advisory firms.
Investors and Traders – Individuals interested in understanding securitization, credit derivatives, and other structured products to make informed investment decisions.
Finance Enthusiasts – Anyone passionate about learning how structured financial products work, especially in relation to credit risk and the 2008 financial crisis.

Course Curriculum

Structured Finance 01 – Beginners

Introduction to Structure Finance
Credit Rating
Credit Default Swap
Credit Event
Securitization
The Beginning
2008 Crisis
2008 Crisis Continue
New Instruments
Tranching
More on Tranching
Different Assets
Securitization Process
Securitization Process Continue
Securitization Benefits
Conclusion

Structured Finance 02 – Credit Derivatives

Introduction to Structured Finance
Uses of Derivative Markets
Asset Site Product
Liability Side
Credit Risk
Credit Default Swaps
Definition of CDS
Definition of CDS Continue
CDS Pricing
CDS Pricing Continues
Calculate Accrued Premium
Default probabilities
Default probabilities Continues
Bond CDS Equivalence
Credit Linked Note
Other Credit Derivatives
Total Return Swap
Asset Swap
Basket Default Swap
Basket Default Swap Continues
Probability of Two Entities
Conclusion