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

Marshall-edgeworth method, Marshall-Edgeworth Method Marshall-Edgeworth...

Marshall-Edgeworth Method Marshall-Edgeworth method uses both the current year as well as the base year prices and quantities. Marshall-Edgeworth Index can be computed using th

Operating cycle, applicability of an operating cycle in a vegetable growing...

applicability of an operating cycle in a vegetable growing business

Finance charges on credit card, Jack needs to borrow $1,000 for the next ye...

Jack needs to borrow $1,000 for the next year. Bank South will give him the loan at 9 percent. Suncoast bank will give him the loan at 7 percent with a $50 loan origination fee. Fi

How financial system works, Question: Part A  The financial syste...

Question: Part A  The financial system is complex in structure and function throughout the world. There are many different types of institutions: banks, insurance compani

#title.case let., this case has been framed in order to test the skills

this case has been framed in order to test the skills

What are assumptions of walters dividend model, Q. What are assumptions of ...

Q. What are assumptions of Walters dividend model? 1. Constant Return and Cost of Capital: - The Walter' model presume that the firm's rate of return and its cost of capital ar

Calculate the cca allowance anfd the pv of tax shield , Home Inc. is consid...

Home Inc. is considering buying a new piece of equipment, which will cost $715,000 and has an economic life of 5 years, in order to produce a new line of product.  The company beli

Operating cycle, applicability of operating cycle in poultry

applicability of operating cycle in poultry

Case lets, what type of financing is appropriate to each fim

what type of financing is appropriate to each fim

Call and notice money, These funds represent borrowings made for a pe...

These funds represent borrowings made for a period of one day to upto a fortnight. However, the mechanism adopted to lend funds to the call and the notice money m

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