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Dear Sir can you please explain be Securitisation with simple example.. Thank you.
Securitisation is a way of converting future income into a lump sum receipt ‘now’.
As a simple example, David Bowie was a famous singer earning a large yearly royalty income from his past recordings. What he did was issue bonds for which the investors paid him a lot of money, but in return it was the bond holders that would get the future income from the recordings and not him. Depending on the amount of the future income, the bond holders might get a very good return or might get a low return. However, that no longer affected David Bowie because he had received a large amount instead from the issue of the bonds.
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