Infrastructure

The infrastructure and energy sectors display the characteristics that appeal to buy-and-hold investors, namely stable, long term cash flows, often within a regulated, essential service environment. The long-term financing and fixed rate and inflation hedging required to support these activities are particularly sensitive to execution costs. 

Solutions for Financial Sponsors and Developers

• Financial Advisory

• Debt Arrangement and Placement: Bonds (including US PP), Syndicated Loans

• Infrastructure Hedging Advisory  

• Strong Expertise in European projects: Renewable Energy, TMT, Transportation,  Oil & Gas

Social Infrastructure

Healthcare

Health and care home providers face new challenges as Governments around the world implement swingeing spending cuts and increasingly expect the private and not-for profit sectors to assume traditional public-sector roles. We provide expert financial and risk management advice and prepare these clients to fund themselves independently of governments.

Education

The education sector faces increasing financial uncertainty given current debate over the mechanisms and availability of funding. Universities, in particular, enjoy a degree of flexibility and autonomy to manage their finances outside of the traditional funding mechanisms through endowment funds, property development, student accommodation and partnerships. We offer financial and risk management advice covering these activities, and access to private finance. 

Social housing

Affordable-housing providers and managers require a unique blend of investment, management and funding skills to succeed in the market. We employ the same rigorous Enterprise Value framework whether we deal with commercial or not-for-profit enterprises, as we believe they are best seen as differing only in the form in which they undertake dividends/distributions. We offer expert advice, analytical tools and sophisticated solutions: bank funding, derivatives resolution, debt capital markets and treasury systems. 

Solutions for housing providers:

• Bank Funding

• Capital Markets

• Mergers, Acquisitions & Reorganisations

• Business Plan & Enterprise Value Models

• Project Appraisal

• Treasury Performance Measurement

Local Authorities

TradeRisks has recently entered the local authority market, and has provided a variety of financial advice to local authorities including: bond arrangement, treasury management services, advice and renegotiation of L-O-B-O’s. We are continuing to attract new clients in the local authority sector and firmly believe this sector can benefit from innovative financial ideas to cope with the challenging environment of government spending cuts. Utilising the capital markets enables Local Authorities to structure their debt in a way that more closely suits their funding requirements than traditional PWLB loans.

Local Authority Housing

Due to the current housing shortage in the UK, and lack of enough planned building by developers and Housing Associations to address the shortage, many Local Authorities are looking to re-enter the house-building market. Over a third of all Local Authorities in the UK have now set up their own housing development companies.

TradeRisks is able to provide advice on the most efficient funding strategies for these housing companies, whether they are wholly owned by the Local Authority or are joint ventures. Where Local Authorities are looking for development partners, TradeRisks is able to leverage its extensive network of Housing Association relationships in order to find a suitable partner for Local Authorities.

TradeRisks is able to analyse potential funding structures (e.g. direct borrowing through the housing company or borrowing through the Local Authority and on-lending) and provide advice on the most efficient funding structure for the specific development opportunity. TradeRisks can provide advice on the most advantageous sources of funding available, examining PWLB, EIB, as well as institutional funding.

As expert in the Housing Sector, TradeRisks is also able to provide shadow credit ratings and appraisals of business plans for housing companies and advise on appropriate interest rates for any lending between Local Authorities and their housing companies, to ensure full compliance with State Aid rules.

Sovereigns

Sovereign treasuries, central banks, development banks, and sovereign wealth funds require a variety of complex risk management solutions. We build long-term client relationships through a deep understanding of strategic objectives and constraints.

Solutions for for Sovereign entities:

Debt portfolio structure optimisation

Our approach and techniques to determine the optimum fixed, floating, inflation-linked, maturity and currency structure of debt are based on proprietary long term financial simulation models which we developed over many years of experience in advising sovereigns, public utilities, and multi-national corporate debt managers around the world. TradeRisks uses Monte Carlo simulation of projected export revenues and long term debt cashflows, and tests alternative debt hedging strategies. The results are typically presented in the context of a client’s long term budget composition and strategic plan in terms of the likelihood that financial targets fall below critical levels.

Optimum asset mix

At the strategic level, the TradeRisks team has experience in working with central banks, development banks and sovereign wealth funds on the theoretical and practical aspects of implementing liability-driven benchmarks. Our liability-driven benchmark approach relies on evaluating the risk-return trade-offs of alternative strategies relative to the liability stream that funds them, with risk being defined for multiple periods and capturing the uncertainty in re-investment rates. Using this approach, the selection of investment strategies takes into account the behaviour of market price and credit spread correlations in both stable and non-stable or extreme market conditions, i.e. combining event risk with statistical risk measures.

Development of domestic debt and derivative markets

We provide strategic advice in relation to appropriate measures aimed at increasing liquidity and transparency, through the development of government bond markets (including inflation linked issuance), bond exchanges, benchmark issues, and buyback operations. We also provide assistance for the development of domestic futures, interest rate swaps and forward-FX markets. TradeRisks’ teams also provide capital markets advisory services in relation to government debt issuance, associated risk management, and financial markets intelligence.

Development of credit scoring models for government-funded enterprises

TradeRisks designs and develops financial and credit scoring models for analysing and managing the liabilities of sovereign institutions, and assisting these clients in understanding their credit risk exposures to private sector corporates and institutions, both domestic and foreign.

We have assisted state treasuries with the credit modelling of financial institutions and corporates which have outstanding treasury guarantees, borrowings, and receivables due to the treasury. We have also advised ministries of finance on the management of fiscal risks and the monitoring of contingent liabilities associated with state lending and investment in infrastructure and Public-Private Partnerships ('PPP').

Our approach involves the risk modelling of both the idiosyncratic credit risk of individual state counterparties, and the econometric modelling of market factors impacting these credit exposures, such as exposure arising from foreign currency mismatches on counterparty balance sheets.