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Sep 23—24, 2019
2 days
London, United Kingdom
GBP 2795 ≈USD 3390
GBP 1397 per day

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Description

Uncover best practice to successfully build your own Financial Institution rating tool

This course identifies relevant approaches of credit analysis that are useful to incorporate in a financial institution’s own internal rating tool. Further, this enables participants to deepen their expertise about credit risk for global banks and sovereign obligors.

Covering Standard & Poor’s, Fitch and Moody’s methodologies helps participants identifying general trends on each of the entities’ rating factors and qualitative adjustments. Through detailed case studies participants will be able to analyse how rating agencies apply their own criteria, and especially which questions remain unanswered in public rating reports. Further participants will develop skills to read between the lines in rating reports in order to fully being able to form their own informed opinions about credit risk of financial institutions of their interest.

The understanding of these methodologies wiill be transformed into practical tips about how internal ratings tools should assess credit risk and which factors need to be taken into account, and to what extent, when analysing ratings. The seminar further discusses also the availability of validated data, so that participants instantly know where to find the right underling information for each of the rating factors, taking into account qualitative as well as quantitative data.

Overall this seminar leads participants to keep track of probability of default and helps to conceive an informed opinion about counterparties’ creditworthiness. This again, helps improve a financial institution’s own internal rating tool, make it more robust and exceptionally forward-looking.

Training Objectives:

  • Analyse bank credit risk in today’s capital markets
  • Interpret macroeconomic data which impact bank credit ratings
  • Identify other quantitative data which rating agencies use for assessing credit risk
  • Integrate qualitative risk factors into the risk assessment
  • Measure the likely impact of sovereign credit ratings on the evaluation of banking system support
  • Appreciate the different ways of how the rating agencies assess credit risk
  • State how investors can predict improvements and deterioration in bank credit quality

Agenda

Day 1

PRINCIPLES AND STRUCTURING

Introduction to the global industry of Islamic finance

  • The major markets globally
  • The major activities in those markets

Introduction to the main principles of Islamic finance

  • From original sources (textual) and its development over time towards modern banking

Application of principles in the development of modern products and markets

  • How such theory is applied within the aspect of product development

Main contractual and transactional forms used globally, and analysis of main applications of such forms

  • Murabaha – money markets, financing, retail finance, home finance, Sukuk, treasury products, FX, swaps
  • Mudarabah – Sukuk, investments
  • Musharakah – Sukuk, investments
  • Ijara – leasing, investments, financing, money market funds, Sukuk

The process of moving from theory and contractual forms towards the end products for modern markets

Major stakeholders involved

  • Scholars
  • Legal
  • Operations
  • Risk management
  • Client managers
  • Clients

Consultation with all relevant stakeholders and how to handle all aspects that will commonly arise

Day 2

The Sukuk market

Introduction to Sukuk, from classical structures

Modern use of Sukuk as equivalent to Islamic “bonds” and capital market instruments

Analysis of the market development

  • Increasing complexity of the sukuk product
  • The global adoption of Sukuk for both Islamic and non Islamic players
  • Domestic vs International Issuances, what points are considered and relevant

Analysis of widely used structures:

  • Ijara, Mudarabah, Wakalah, Musharakah, Murabaha etc
  • What structure is the best and most relevant for issuers and investors
  • Why are the various structures chosen over others

Using Sukuk for Project Finance

Securitisation and Sukuk

For each Sukuk structure, the following shall be covered

  • Developing basic contractual forms into complex Sukuk instruments
  • Detailed structure analysis and flows
  • Credit enhancements and risk management
  • Role of all parties involved (Issuer, agents, bookrunner, sales, issuer, Scholars, regulators)
  • Review of documentation, the key contracts involved How to convert these structures into modern liquid capital market instruments
  • Pricing and related issues

Asset backed vs Asset based Sukuk, why is this important

Factors to be considered for both Soveraign and corporate issuers

What is more relevant to domestic issuance and international issuance

Economic factors considered

  • Currency
  • Tenor
  • Fixed vs floating rate profit distributions
  • Restructuring when required
  • Default and early termination scenarios

Use of Sukuk as liquid instruments

  • How to ensure Sukuk issues remain liquid and tradeable

Role of Scholars in the approval and on going auditing of Sukuk transactions over their life

Use of Sukuk in Equity Capital markets

  • Mezzanine finance
  • Equity linked returns and risk

Case Studies : There will be several case studies and analysis of the major and innovative Sukuk issuances and structures used in the markets

Day 3

Islamic Treasury Products

Focus on relevant guidelines and restrictions in Shariah and application to Treasury

Introduction to Islamic Money Markets

The use of commodity Murabaha from first principles

Documentation and risk outcome and risk management

Variations in commodity murabaha used in the global markets

  • Single broker, dual broker, no broker
  • Use of commodity murabaha in other sectors such as investments and financing

Analsysis of major risks involved

  • Operational
  • Legal
  • Pricing and asset risk
  • Settlement risk

Shariah Risk

  • What is Shariah Risk and why is it relevant
  • how Islamic contracts are viewed in the Courts (England)

Standardisation of money market products

  • What is being done and why
  • Difficulties that arise in standardisation

Wakala contracts, when are they used and why

  • Pro and cons compared to Murbaha contract

The role of ISDA in Islamic markets and product development

FX products and risk management

FX Spot

  • Using commodity Murabaha

FX Forward

  • Using commodity Murabaha
  • Using Wa’ad and undertakings

Fx Options

  • Using commodity Murabaha
  • Using Wa’ad and undertakings

The use of the Arboun contract in option structures

Analysis of Swaps

  • FX Swaps and Cross Currency Swaps
  • Profit Rate Swaps
  • Different models and structures that can be used
  • Impact of on balance sheet and off balance sheet models
  • Marking to market
  • Default and early termination scenarios
  • Yield Enhancement Products as liquidity tools
  • Dual currency deposits

Capital protected deposits and investments

  • How they are structured, priced and executed

Use of Sukuk as liquidity treasury instruments

Money Market funds

  • How are they structured
  • Who uses them and why are they useful

Case Studies : There will be several case studies and analysis of hedging strategies for FX and Profit Rate swaps, using the techniques that are covered. In addition, a structured investment and hedging solution will be developed for a demanding client.

Day 4

Investments

Focus on relevant guidelines and restrictions in Shariah and application to investing and buying of assets

Different kinds of funds available: Equity

  • Which equities can be used and which are impermissible

Real Estate

  • Development of property
  • Purchase and rental income

Private Equity

  • Screening of assets
  • Conversion of non-Islamic to Islamic companies/assets

Structured products

Returns on varied asset classes

  • Indices
  • FX, rates
  • Equities performance

What are the actual assets that are purchased and how are they purchased

Alternative assets

  • Gold
  • Forestry etc

The role of Shariah compliance in funds

  • Screening of assets and how it varies depending on the type of fund
  • Contractual forms used
    • Mudarabah
    • Wakalah
    • Musharakah
  • Auditing of asset pool during life of the fund

The use of financing (if required) for the purchase of assets eg Real Estate funds

  • What kind of Islamic financing is available
  • How is it utilised to purchase assets

Investments for different markets and investors

  • Retail
  • Institutional
  • Private Banking/ Wealth Management/ Family Offices

The application of capital protection when required by investors

Case Studies: There will be several case studies and analysis of funds/investments in the market covering different asset classes and structures

Day 5

Islamic financing products and markets

Financing from an Islamic perspective

When financing is permitted

  • General financing vs financing for specific projects/enterprise

The different roles in a financing structure

  • The traditional roles of lender and borrower are impermissible
  • Financier as an investor or agent
  • The roles of agency in the contractual forms

How it needs to be structured

  • Using building blocks such as Murabaha
  • What if clean financing is required
  • What if financing is required for specific purposes or acquisitions

How are profits generated for the financier when interest is impermissible

Analysis of financing products and markets

  • Corporate finance
  • Retail finance
    • Personal financing
    • Auto finance
    • Home finance
    • Credit cards
  • Collateralised finance
  • Syndicated finance
  • Structured/acquisition finance
  • Project finance
  • Debt capital markets / Sukuk
  • Equity capital markets
  • Trade finance

For each of the above markets, the following will be covered

Suitable contractual forms to be utilised, based on current market practice

Legal overview of the structures and contracts

How have the markets evolved in each sector and the contractual forms have become more sophisticated

How the “financier” has to become more involved in the whole transaction compared to a traditional lender

  • The extra roles played by the financier
  • Impact on regulatory aspect for banks and financing entities
  • Risks faced by a financier

How each risk is mitigated contractually and in practice

Case Studies : There will be several case studies and analysis of financing transactions and products in the global markets as well as delegates working to find solution to innovative financing requirements of clients

Course summary and close

Experts

Ron Slomovits has established Rating Advisory after twelve years of professional experience in the financial and consulting industry. He supports capital markets participants on credit rating related matters, specializing in banks, insurance companies, regional government and funds. The company o...

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Detailed Description
Detailed Description

Next dates

Sep 23—24, 2019
2 days
London, United Kingdom
GBP 2795 ≈USD 3390
GBP 1397 per day

How it works

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