Structured credit
A business that services its debt but cannot raise against it, because the rating, the sector or the security package sits outside a bank's box.
Structured credit is what capital looks like when it is engineered around the underwriting rather than around the borrower's credit rating. The question stops being whether the company clears a scorecard and becomes whether a specific, identifiable set of cash flows can be isolated, secured and made to service a facility on a defined schedule.
That distinction matters most in the Indian mid-market, where a business can be profitable, growing and entirely creditworthy in substance while still failing the internal test a bank branch is rewarded for applying. The gap is rarely about risk. It is about whether the risk can be described in a form the lender's credit committee is set up to approve.
What structured credit covers
- Asset-backed structured credit
- Facilities secured on identifiable assets — property, plant, inventory or a specific project — where the underwriting is the asset and its realisable value rather than the borrower's rating.
- Cash-flow-backed financing
- Capital sized against contracted or recurring collections, with the flows isolated, escrowed and applied through a fixed waterfall before they reach the borrower.
- Promoter and HoldCo financing
- Facilities above the operating company, secured on shareholdings and underwritten on what actually reaches the holding company after everything ranking ahead.
- Bridge and event-driven capital
- Short-dated capital against a defined event — an approval, a settlement, a monetisation, a refinancing — where the exit is the event rather than a general expectation.
- Acquisition and stake financing
- Capital to acquire a business or consolidate a shareholding, structured around the security available at the level the borrowing sits.
- Structured refinancing
- Replacing a facility whose terms, tenor or amortisation no longer match the business, where the answer is a different structure rather than simply a different lender.
- Bespoke private-credit structures
- Where none of the standard shapes fits: hybrid instruments, staged commitments, and facilities built around a constraint specific to the situation.
When this applies
- The business generates cash but the rating, sector or promoter profile puts it outside a bank's appetite.
- The security available is real but does not fit a standard charge — receivables, contracted flows, a single project, an asset held in a subsidiary.
- The requirement is lumpy or time-bound, and a working capital line sized to the balance sheet does not answer it.
- A facility has been declined without the underlying cash flows ever being examined in isolation.
What makes it difficult
The work is in narrowing what the lender is exposed to. A facility secured on a whole company is underwritten against every risk that company carries, including the ones unrelated to the purpose of the borrowing. A facility secured on an isolated set of flows is underwritten against those flows.
Isolating them is a legal and operational exercise, not a presentational one. Cash has to actually arrive somewhere the lender can see and control it, the charge has to survive the borrower's other obligations, and the mechanics have to hold when the business is under pressure rather than only when it is performing.
Get that wrong and the structure is decorative: it reads as ring-fenced in the term sheet and behaves as unsecured in a default.
How it is structured
Isolate the cash flow
Identify what actually services the facility — a contracted receivable book, a project's collections, a specific counterparty flow — and establish whether it can be separated from the rest of the business in law as well as in the model.
Build the security package
Charge the assets that support those flows, check what ranks ahead, and confirm the charge can be perfected and enforced rather than merely registered.
Control the money
Escrow and waterfall mechanics so collections reach the lender's account before they reach the borrower's, with the order of payment fixed in the documentation.
Tie disbursal to progress
Where the use of funds is a programme rather than a lump requirement, release capital against certified milestones so the lender's exposure grows only as the underlying value does.
Document the downside first
Settle enforcement rights, cure periods and the intercreditor position before commercial terms are circulated, because those are the terms that decide recovery and the ones hardest to renegotiate later.
What a capital provider tests
- What the identified cash flows actually generate, how reliably, and what is already committed against them
- Whether the security can be perfected, and what it is worth in a forced timeline rather than a planned one
- Who ranks ahead, and what the intercreditor position looks like in practice
- Concentration: how much of the flow depends on a single counterparty
- The refinancing or amortisation path, and whether it survives a tighter market
Discuss a situation
Bring the position, the existing debt schedule and the timeline. We come back with a view on whether it is structurable and what it would take.
Discuss a mandate