Process of securitization, Financial Management

Assignment Help:

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.      


Related Discussions:- Process of securitization

Relate lost sales to the definition of incremental cash flow, Relate the co...

Relate the concept of lost sales to the definition of incremental cash flow. While a new capital project is take on it may compete with an existing project or projects, causing t

Evaluate net realisable value of assets, Q. Evaluate Net realisable value o...

Q. Evaluate Net realisable value of assets? Valuation (i) Method 1 - Net assets according to the statement of financial position Value = $295000 Reservation N

Restrictions on investments, Restrictions on Investments: A mutual fund...

Restrictions on Investments: A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer, which are rated not below investment

Answer to an exercise, dear, I found an exercise on the Internet which coul...

dear, I found an exercise on the Internet which could help me has better to understand the finance, but there were no answers. What is that you can help me has to solve it. I''m fr

What is the de-merger, What is the De-merger This is splitting up of a ...

What is the De-merger This is splitting up of a group into two or more separate bodies. The group is split into separate entities, but the shareholders remain the same. It is o

Scope of the content of the finance function, Q. Scope of the content of th...

Q. Scope of the content of the finance function? 1) Estimating of the finance requirement: the first task of a finance manager is to estimate and short terms and long terms fin

Example to show the companys current gearing, Q. Example to show the compan...

Q. Example to show the companys current gearing? The company's current gearing 2000/ 8500 × 100 = 23.53% The current gearing position is on the low side particularly wh

Explain the term finance companies, Finance companies Finance companies...

Finance companies Finance companies make loans to individuals as well as corporations by providing consumer lending business lending also mortgage financing. A few of their loa

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd