Capital Markets Masterclass

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Samuel Wade
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1 Capital Markets Masterclass A Complete Understanding of Debt & Equity Capital Markets This course is presented in London on: March 2019, September 2019 If you have 5 or more participants it may be cost effective to have this course presented in-house either on your premises or via live webinar. The Banking and Corporate Finance Training Specialist

What Makes This Course Different Practical workshop by experienced trainer, ex-investment banker with years of experience in Europe and the Middle East Recent capital markets transactions analysed in

2 What Makes This Course Different Practical workshop by experienced trainer, ex-investment banker with years of experience in Europe and the Middle East Recent capital markets transactions analysed in detail with participants Use of detailed Excel financial models to perfect understanding of transactions Comprehensive material covering all aspect of equity capital markets Delegates encouraged to bring their own scenarios to solve during the session Comprehensive Course Overview material covering all aspect of debt capital markets Step-by-step exercises with scenarios on Excel financial models to perfect understanding of derivatives Comprehensive material covering all major aspects of derivatives for issuers Course Objectives Day one starts by covering the main functions and players of capital markets. Participants are then introduced to equity markets and products. We will focus on the life-cycle of equities, starting with the Initial Public Offering and moving afterwards to secondary offerings (rights issues, accelerated book building, bought deals, etc.). We will also look to the secondary market, including motivations of investors. We will drill down on the characteristics of equity and introduce comparable and fundamental equity valuation. Day two starts by covering the main debt products available to corporates. Both long and short term, and public and private financing options are explained. The bond issuance process and key documentation are discussed. Participants then gain understanding of the credit rating process by examining the assessment of an investment grade corporate. Finally, the session covers covenants in a debt documentation. We will review specific defined terms, including incurrence and maintenance covenants, negative pledge and change of control provisions. We will put the covenants into practice through the review of companies' financial statements. The third session starts by discussing the different risks that corporates face and what are the derivatives used to protect themselves. We will focus on the ways in which corporate clients use interest rate swaps to manage their financing risks. We will then introduce participants to the workings of FX markets. The relevance of FX to every market, client and transaction type will be emphasized. The mechanics and purpose of spot and forward FX will be explained. Finally, IFRS 9 and hedge accounting and strategies will be analysed based on different corporates situations. Course Content Day One Session 1 Capital Markets Fundamentals What financial markets do? Who are the major players? Domestic and international capital markets Debt versus equity Primary versus secondary market

3 Distinguishing between retail, corporate and investment banking Buy side versus sell side League tables, equity & debt underwriting Loan and bond markets Corporate advice and finance Where transactions take place: Exchanges vs. OTC vs. ECNs The buy-side industry/investors Active vs. passive investment management Asset allocation Session 2 Equity Overview Listing rules Key rules in main equity markets Thresholds for disclosing shareholders name and intentions Mandatory takeover thresholds Minority squeeze-out mechanism Share classes Different classes Preference shares ADR and GDRs Issuing shares in different markets Session 3 Equity Capital Markets (ECM) ECM and IPO trends: volume, industries, actors in the US, Europe and China The corporate lifecycle and equity financing options Cross-listing vs. dual listing ECM role and fees Session 4 Initial Public Offerings (IPO) Process overview: legal and marketing steams ECM functions Origination and execution Syndicate desk Sales team Banking roles (bookrunner, manager, underwriter) and fees Best efforts vs. underwriting International offerings vs. Dutch auctions Steps in equity offerings Prospectus and listing Book building and arriving at a price Quiet period Stabilization and greenshoe option IPO modelling What are the criteria of a successful IPO from vendors and banks viewpoint Case Study I: Detailed analysis of the Facebook US$ 16 billion IPO

4 Session 5 Rights Issue Pre-emption rights in different countries Cum rights price (CRP) Theoretical ex rights price (TERP) Renouncable rights Selling vs. exercising the right Case Study II: Detailed review of the Baclays 5.6 billion rights issue Session 6 Other Follow-on Offerings Follow-on offering with full prospectus Accelerated book building: in conjunction with press announcements Overnight public offering Bought deal/block trade (at pre-negotiated price) Private placement Modeling a follow-on placement Day Two Section 1 Debt Capital Markets The corporate lifecycle and debt financing options Bank debt vs. public markets debt Short-term, medium-term and long-term debt options Bond issuance process Due diligence Pricing: yield, all-in-costs Prospectus and listing Roadshow Syndicate and bond allocation Market making and after-market Rating agencies and its process Session 2 Short-Term Debt Funding Bank debt products Overdraft: uncommitted, unsecured, repayable at anytime Revolving credit facility (RCF): a committed credit limit Public markets products Commercial paper Investors and issuers Priced at discount to par Session 3 Medium to Long- Term Debt Funding Bank debt Term loan

5 Syndicated loans Publicly issued bonds Medium-term notes programme and long-term bonds Bonds specifics Coupon, price and yield, all-in-costs Yield curve and basic explanations (inflation, risk and supply-demand dynamics) Benchmark: local government bonds and mid-swap rate Credit spread overview Case Study I: Participants analyse the recent Apple bond issuance, term sheet and prospectus Section 4 Credit Analysis What is credit analysis? Key credit analysis principles: cash based, forward looking, peer group Ratings scales: S&P, Moody s and Fitch Probability of Default (Pd) and Loss Given Default (LGD) Issuer and issue ratings Cash flow analysis from a credit point of view FFO, FOCF, DCF Credit ratios: most common ratios (FFO/Debt, Debt/EBIT, EBITDA/interest) Overview of rating agencies Case Study II: Participants perform the rating of a corporate issuer based on S&P and Moody s methodologies Section 5 Covenants Affirmative vs. negative covenants Financial vs. non-financial covenants Incurrence vs. maintenance covenants Setting covenants based on management business plan Financial covenants and illustration with company financials Cash flow cover Fixed charges Net worth covenants Interest cover - variations of ratios Leverage - variations of ratios Case Study III: Participants decide on most appropriate financial covenants for a corporate issuer Day Three Session 1 Key Corporate Risks Interest rate risk Variable loans and fixed rate bonds issued Managing government and corporate bond asset portfolios Foreign exchange risk Foreign currency subsidiaries Asset purchases and sales in foreign currencies M&A of foreign targets Organic growth in foreign markets

6 Credit risk Government and corporate bonds bond portfolios Equities portfolios Accounts receivable Hard and soft commodity risks Oil prices for airlines industries Agricultural products for food manufacturers Case Study I: Review of different corporate risk assessment Session 2 Derivatives Overview Regulated markets vs. OTC Mechanism of key derivatives Futures Forward Options Interest rate swaps Session 3 Interest Rate Derivatives Quoting convention Fixed rate and floating rate legs Pricing principles Mark-to-market Swap unwinds Case Study II: Valuation of an interest rate swap Session 4 Foreign Exchange Introduction to FX Key market participants Managing FX risk FX market-making conventions FX spots FX forwards and forward basis points Case Study III: Analysis of a FX forward Session 5 IFRS 9 Hedge Accounting Different types of hedge accounting, same as IAS 39, except for time value of money and forward points in foreign exchange forward Cash flow hedge Fair value hedge Net investment hedge for foreign subsidiaries Accounting for time value of money for options: a two-step process through OCI Accounting treatment for foreign currency forward points in OCI IFRS 9 hedge accounting more closely aligned to risk management policy Removal of hedge effectiveness criteria (80% to 125%) Extends eligibility of risk component to include non-financial items Permits aggregate exposure that includes a derivative to be eligible hedged item

7 Group of items and a net position (e.g. assets & liabilities or forecast sales & purchases) hedged collectively as group Case Study IV: participants will review and assess different hedge scenarios including risk component hedging, aggregate exposures and net position Background of the Trainer The trainer has 20 years of experience in accounting and investment banking at leading firms and is an experienced financial trainer who has delivered courses for financial institutions in the City of London and around the world, in the areas of Corporate Finance, Valuation (Industrials and Banks), Financial Modelling, M&A, LBO, Financial Accounting, Capital Markets, Bank Regulatory Capital, Financial Risks, both in English and French. 09:30-17:00 London Standard Price: VAT Membership Price: VAT

In-House Training Delivering this course in-house for 5 or more participants could

The venue and timing can be agreed to suit the client, as well as the selection of

Tailored Learning All of our training courses can be tailored to suit your company

We will work closely with you to help develop a training programme with content

8 In-House Training Delivering this course in-house for 5 or more participants could be very cost effective. The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the precise contents of the seminar. Tailored Learning All of our training courses can be tailored to suit your company s exact training needs. We will work closely with you to help develop a training programme with content that is unique for your organisation. Please us on enquiries@redcliffetraining.co.uk for more information E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements.

Equity & Debt Capital Markets

Equity & Debt Capital Markets Examining the main functions and players of capital markets This course can be presented in-house either on your premises or via live webinar for a group of 5 or more participants.