Corporate and investment banking primarily center their efforts on funding the growth of businesses and companies, while addressing their investment requirements.
Wholesale clients, encompassing a range from various-sized enterprises to financial institutions or institutional investors, demand more advanced financial products, either due to their scale or the specific characteristics of their operations.
5+ Essential Concepts about Investment Banking.
Shares
A bond is a debt product issued by a company or government that is sold to investors in financial markets to raise funds to finance its operations.
The bond issuer pledges to repay the bondholder the borrowed money plus a specified amount of interest (the so-called coupon).
When issuing a bond, issuers typically seek the assistance of banking institutions, which act as placement agents.
Bonds
A bond is a debt product issued by a company or government that is sold to investors in financial markets to raise funds to finance its operations.
The bond issuer pledges to repay the bondholder the borrowed money plus a specified amount of interest (the so-called coupon).
When issuing a bond, issuers typically seek the assistance of banking institutions, which act as placement agents.
Project Finance
The term project finance refers to the financing of significant infrastructure or energy projects that need large investments with long payback periods.
They are organized around the long-term predictability of their cash flows and are organized through fixed contracts with customers, suppliers, market regulators, and so on.
This funding activity is inextricably tied to the development of a country's basic infrastructure and hence contributes to its economic development.
Trade finance
Trade finance refers to the portfolio of products needed to promote international trade and allow importers, exporters, banks, insurers, and export credit agencies (ECAs) to arrange transactions.
This product portfolio includes buyer's credit, the issue of letters of guarantee, invoice discounting, and insurance.
This activity allows firms and individuals to import and export products and services, reducing the risks associated with international trade and streamlining transaction settlement processes.
Initial Public Offering
Trade finance refers to the portfolio of products needed to promote international trade and allow importers, exporters, banks, insurers, and export credit agencies (ECAs) to arrange transactions.
This product portfolio includes buyer's credit, the issue of letters of guarantee, invoice discounting, and insurance. This activity allows firms and individuals to import and export products and services, reducing the risks associated with international trade and streamlining transaction settlement processes.
Capital increase
A capital increase is the procedure by which a firm raises its share capital. In other words, it means offering additional value and goods to the organization.
A corporation's capital is often increased by issuing new shares or directly increasing the share value of the company without requiring shareholders to make any further payments.
Corporate Loan
Corporate loans are financial transactions in which a bank (lender) lends a certain amount of money to a third party (borrower), in this case, a firm, in exchange for an interest rate known as the cost of money.
Depending on whether the loan is arranged with a single lender or a group of lenders, we can distinguish between bilateral and syndicated loans.
M&A
The M&A activity (M&A stands for Mergers and Acquisitions) is a phrase used to describe a business growth strategy in which a firm acquires, buys a share in, collaborates with, or takes control of another company's business or assets to expand its current business or venture into new ones.
Banks serve as financial consultants, focusing on resolving corporate issues and providing suggestions targeted at increasing shareholder value.
Lastly, investment banking is critical in the financial sector, as it facilitates capital raising, supports company growth, and promotes economic progress.
The principles addressed in this blog provide a foundational grasp of the important areas within investment banking, preparing aspiring professionals for their journey in this dynamic business. For more insights enroll in our course.
