Structured finance is a lesser known area for graduates, after trading and M&A, but it can actually be one of the best divisions to plump for... principally because it can enable quick specialisation and gives the potential to build expertise. Here, we’ve compiled the five things you need to know about this area of the financial sector, and a career within it.
1. What is it?
The term structured finance refers to financial instruments which are created to transfer risk, for example, structuring assets and securities so as to create collateralised debt obligations (CDOs) or asset backed securities at varying risk levels.
2. Why is it used?
This type of financing is usually bespoke and used for institutions where more common financing is not appropriate. These instruments lead to increased liquidity which is great for finding funds for investment.
3. Why is it a good career?
Because of the level of expertise needed to be able to assess the risk in the transactions, financiers will normally specialise in an industry, e.g. infrastructure, or in a product. The more they know, the more valuable their advice.
4. Who would enjoy it?
Graduates who enjoy focusing on a narrow area in depth and then using that knowledge to provide tailored and innovative solutions would do well in this area.
5. How to impress in an application
To stand out in the application process you’ll need proof of your analytical skills as well as your broader commercial skills. You’ll have to show you can read detailed reports on an industry and draw out conclusions and recommendations – and enjoy it!