IIn a typical arrangement, the owneror "originator"of assets sells those assets to a special purpose vehicle (SPV). This may be a corporation, US-style trust, or some form of partnership. It is established specifically to facilitate the securitization. It may hold the assetscollateralon its balance sheet or place them in a separate trust. In either case, it sells bonds to investors. It uses the proceeds from those bond sales to pay the originator for the assets
Most collateral requires the performance of ongoing servicing activities. With credit card receivables, monthly bills must be sent out to credit card holders; payments must be deposited, and account balances must be updated. Similar servicing must be performed with auto loans, mortgages, accounts receivable, etc.
Brickell Global - Securitization.
A securitization is a financial transaction in which assets are pooled and securities representing interests in the pool are issued. An example would be a financing company that has issued a large number of auto loans and wants to raise cash so it can issue more loans. One solution would be to sell off its existing loans, but there isn't a liquid secondary market for individual auto loans. Instead, the firm pools a large number of its loans and sells interests in the pool to investors. For the financing company, this raises capital and gets the loans off its balance sheet, so it can issue new loans. For investors, it creates a liquid investment in a diversified pool of auto loans, which may be an attractive alternative to a corporate bond or other fixed income investment. The ultimate debtorsthe car ownersneed not be aware of the transaction. They continue making payments on their loans, but now those payments flow to the new investors as opposed to the financing company.
All sorts of assets are securitized: auto loans, student loans,mortgages,credit card receivables,lease payments,accounts receivable, corporate or sovereign debt, etc. Assets are often called collateral.
Brickell Global offers an innovative and integrated platform of securitization advise and services allowing us to provide best-in-class service to our clients. Brickell Global offers local market expertise with worldwide reach through our International affiliation. Brickell Globals entrepreneurial spirit and strong reputation as an industry leader, make our company the right choice to assist you with your commercial real estate needs.
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