Asset Securitisation

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  • Avatar of ionela2009
    ionela2009
    Participant
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    Hello there..

    Can everyone explain to me what is happening thorugh asset securitisation and what would be the effect on the company books?

    Thank you


    avatar
    AQ!
    Participant
    • Topics: 13
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    Let me try for that!!!!

    Asset Securitization means raising funds by keeping ur assets as security. Usually this happens when company has many liquid assets but less cash to fund its investments or even operations.It can be against future cash flows of ur revenue streams for leasing company future lease payments.

    But financial sector is well known for this process. Bank provide mortgage loans to customers and these are assets for bank. As bank is typically intermediary so bank bundle those assets in form of Bonds and sell them to investment companies so typically borrowers of bank pay interest+repayment to investors who have purchased bonds and bank deduct margin or spread for itself.

    We have this topic in P4 and an article “Toxic Assets” on this in which such bonds are called Collateral Debt Obligation (CDOs). These CDOs are traded by banks and rated by rating agencies (TRANCHES) .Financial crisis of 2007 was outcome of this process.’

    Its was just little about Assets Securitization…

    Please read that article……………..!!!!

    Sir John can advice in much better way


    Avatar of krishnamr007
    krishnamr007
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    great………………


    Avatar of ionela2009
    ionela2009
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    Thank you. I read the article…it is a little bit more clear…but still confusing…


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    dazhong0703
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    Securitization last sitting just came out, will be tested again this sitting?

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