Negotiating SPV Structured Note Terms: A Primer For Investors

Structured notes are useful tools for both investors and issuers because of their flexibility. They can be linked to the performance of equity securities, loans, bonds, indices, commodities or a basket of financial assets and can provide investors with a leveraged exposure to the reference asset or a hedge against particular assets to which they already have exposure. The issues an investor needs to care about will vary greatly depending on the type of the structured note and the investor's sensitivity to counterparty and structural risks. This article will focus on the issues that an investor should consider before investing in structured notes issued by special purpose vehicles (SPVs).