Reso Invest brings you all the latest news on the loan market, the equity markets and the insurance markets as well as focussing on investments and capital funding.
Topics which we cover include mezzanine finance, securitization and short term finance, to mention just three areas.
Mezzanine Finance
Mezzanine finance is a form of debt which is usually used in leveraged buy outs. It is a hybrid of debt and equity, being debt capital which carries the right to convert to equity or ownership in the event the loan is not paid back in full to the agreed timetable. The returns expected from mezzanine capital are higher than conventional debt as it is generally subordinated to the senior debt of banks. As such mezzanine carries a high level of risk should a company co into insolvency or liquidation.
Securitization
Securitization is the process of bundling smaller financial assets into a larger package, with tranches of the larger package then resold to institutional investors. Securitization has become very popular in recent years as it allows companies to receive funding which previously would have been unavailable. It also brings liquidity for investors allowing them to buy and sell previously untradeable assets.
Short term finance
As the name suggests, short term finance provides funds for very small period of time usually through short term loans. These loans are typically unsecured which means that higher returns need to be paid to offset the increased risk for the lender.