Process of securitization, Financial Management

Steps involved in the Process of Securitization

The following are the major steps involved:

  1. The lender (also called the originator) - in this example, the NBFC - segregates its loans portfolio into homogeneous pools, which are then transferred to a Special Purpose Vehicle (SPV). 

  1. On its part, the SPV issues asset-backed debt instruments. These can be with or without recourse.

  1. Interest and principal on the underlying pool of assets are collected and transmitted to the investors by a designated party which can also be the original lender.

  1. Credit enhancement in the form of a guarantee from the original lender will boost investor confidence. Advantages and disadvantages of securitization obviously help in improving the seller's (the originator or the lending company) liquidity. Its capital is freed for other uses. Group or sectoral exposures can be altered through this route. Interest rate mismatches can be corrected.      

Posted Date: 9/8/2012 7:47:49 AM | Location : United States







Related Discussions:- Process of securitization, Assignment Help, Ask Question on Process of securitization, Get Answer, Expert's Help, Process of securitization Discussions

Write discussion on Process of securitization
Your posts are moderated
Related Questions
QUESTION 1 Discuss the role and contribution of the procurement function in an organisation. QUESTION 2 Discuss the main objectives of purchasing negotiations. Compare

Q. Explain about Loans - Forms of Bank Finance? When a bank makes an advance in lump-sum against some security it is called a loan. In Case of a loan, a specified amount is san

Settlement Mechanism: Nifty index futures and option contracts are cash settled. All CMs are required to open a separate bank account with NSCCL designated clearing banks. T

Q. What do you mean by Public deposits? Public deposits are the fixed deposited by the business enterprises directly from the company. This source of the raising the short term

Blossom Lawn expects to have total sales next year totaling $15,000,000 and the firm pays taxes at 35% and will owe $300,000 in interest expenses.

Explain the terminologies of finance Raise and efficiently utilise funds which are your disposal (or at least try to).That a business organisation also needs to do the same can

What is an annuity? An annuity is a sequence of equal cash flows, spaced consistently over time.

Bonds issued by the government are termed as treasury bonds. For example, dated securities issued by the government. These bonds are normally issued for longer ma

This question tested the core area of specifically gradually consolidation and acquisitions (control to control). The principle of calculation of goodwill at the date where control

Every business concern should have neigh adequate capital to run the business operations it should have neither redundant nor excess working capital non inadequate or Shortage of