Broadly speaking, it is the use of leverage in the structure of an investment. It is a structural component of an alternative investment that cannot be made without leverage (e.g., leveraged buyouts or a hedge fund that uses futures on specific underlyings such as commodities, currencies, etc.)
It also denotes the use of leverage in bringing about synergies from existing investments in order to support a new investment (therefore, it is called a synergistic leverage).
In another context, structural leverage is a kind of leverage (specifically: direct leverage or explicit leverage) in which collateral loss associated with an investment or instrument leads to more proportional loss to the investment/ instrument. For example, structurally levered (leveraged) investments/ instruments include first-loss tranches and mezzanine tranches on a mortgage pool, or a company’s equity and subordinated debt with senior debt outstanding.
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