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

Determine the financial structure of business risk, Determine the Financial...

Determine the Financial structure of business risk Financial structure shifts toward suppliers of funds recognize a more highly levered position increased financial risk associ

Saving and lone assocition, what is saving and lone function in ethiopian c...

what is saving and lone function in ethiopian context

Full, Full, Fair and Adequate Disclosure The architecture of business...

Full, Fair and Adequate Disclosure The architecture of business has evolved from proprietorship to partnership to joint stock companies or publicly held companies. Except fro

Interpretations of short term solvency or liquidity ratio''s, Short Term So...

Short Term Solvency or Liquidity Ratio's   CR:          The Current Ratio is calculated by current assets to current liabilities and is the index of company's financial stab

Example on hedge fund, Q. Example on hedge fund? Hedge Fund enters agre...

Q. Example on hedge fund? Hedge Fund enters agreement to sell HK$ in six month's. At expiration the Hedge Fund requires to buy spot HKD and deliver these against the short futu

Bonds with warrants, Bonds with Warrants: Warrants are usually attached...

Bonds with Warrants: Warrants are usually attached with the bonds or preference shares to attract the investor. The objective is to induce the potential investors to subscribe

Problems in computations of cost of retaining earning, Q. Problems in compu...

Q. Problems in computations of cost of retaining earning? Problems in computations of cost of retaining earning: it is sometimes argued that retained earning do not involve any

Working capital mini qs, Q. Working capital mini Qs? During January 20X...

Q. Working capital mini Qs? During January 20X4, Gazza Ltd made credit sales of £30,000 that have a 25% mark up. It also purchased £20,000 of inventories on credit. Calculat

Determinants of the repo rate, Repo rates vary from transaction to tr...

Repo rates vary from transaction to transaction. They depend upon a variety of factors like: Collateral's quality Repo term

Pay back method, Ask I have included a simple capital investment problem wh...

Ask I have included a simple capital investment problem which is in Course Documents. We are going to use the same numbers for several classes and look at some of the ways that cap

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