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    Securitisation and Issue Management

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    Ritam Ghosh
    Securitization is a process that transforms receivables like loans into securities that can be traded in the open market. It involves a borrower taking a loan, which is then pooled with other loans and transferred to a Special Purpose Vehicle (SPV). The SPV acts as a trustee and issues securities to investors backed by the loan pool. This provides benefits to both lenders and investors by giving lenders another source of funding and investors potentially higher returns with the risks mitigated by collateral. There are several standard categories of securitizations including mortgage-backed securities, asset-backed securities, and collateralized debt obligations.

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    © All Rights Reserved
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    Securitisation and Issue Management

    Uploaded by

    Ritam Ghosh
    85 views12 pages
    Securitization is a process that transforms receivables like loans into securities that can be traded in the open market. It involves a borrower taking a loan, which is then pooled with other loans and transferred to a Special Purpose Vehicle (SPV). The SPV acts as a trustee and issues securities to investors backed by the loan pool. This provides benefits to both lenders and investors by giving lenders another source of funding and investors potentially higher returns with the risks mitigated by collateral. There are several standard categories of securitizations including mortgage-backed securities, asset-backed securities, and collateralized debt obligations.

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    8. securitisation and issue management.pptx

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    Securitization is a process that transforms receivables like loans into securities that can be traded in the open market. It involves a borrower taking a loan, which is then pooled with other loans and transferred to a Special Purpose Vehicle (SPV). The SPV acts as a trustee and issues securities to investors backed by the loan pool. This provides benefits to both lenders and investors by giving lenders another source of funding and investors potentially higher returns with the risks mitigated by collateral. There are several standard categories of securitizations including mortgage-backed securities, asset-backed securities, and collateralized debt obligations.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    85 views12 pages

    Securitisation and Issue Management

    Uploaded by

    Ritam Ghosh
    Securitization is a process that transforms receivables like loans into securities that can be traded in the open market. It involves a borrower taking a loan, which is then pooled with other loans and transferred to a Special Purpose Vehicle (SPV). The SPV acts as a trustee and issues securities to investors backed by the loan pool. This provides benefits to both lenders and investors by giving lenders another source of funding and investors potentially higher returns with the risks mitigated by collateral. There are several standard categories of securitizations including mortgage-backed securities, asset-backed securities, and collateralized debt obligations.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    Securitisation

    Scope of financial services


    Fund based services
    Underwriting
    Dealing in secondary market activities
    Participating in money market instruments like CPs, CDs
    etc.
    Equipment leasing or lease financing
    Hire purchase
    Venture capital
    Bill discounting.
    Insurance services
     Factoring
    Forfaiting
    Housing finance
    Mutual fund
    Non fund based services (fee based
    services)
    Securitisation
    Merchant banking
    Credit rating
    Loan syndication
     Business opportunity related services
    Project advisory services
    Services to foreign companies and NRIs
    Portfolio management
    Merger and acquisition
    Capital restructuring
     Debenture trusteeship
     Custodian services
     Stock broking
    Introduction - securitization
    Debt securitization is a process of
    transformation of receivables into security
    which may be traded latter in the open
    market.
     B , the borrower
     L , the lender
     T , the trustee
     I , the investor
    Process
    Step-1: B seeks a loan from L . If L is satisfied loan is
    granted with agreed terms and conditions between B and L.

    Step-2: In the same fashion other borrowers also take loan


    from L. Now , the loans granted by L are receivables of L .
    Such types of loan are clubbed based on some
    predetermined criteria. As a result a pool of assets is created.
    This pool is transferred in favor of a SPV ( Special Purpose
    Vehicle ) , which act as a trustee (T) for the investor(I).

    Step-3: T structures the pool and issues in the form of


    securities to investor (I). The originator (L) usually keeps the
    difference between interest on loan and interest paid to
    investor (I).
    The process of securitisation is generally
    without recourse i.e. the investor bear the
    credit risks and the issuer (T) is under
    obligation to pay to investors as and when
    cash is received from borrower (B). The
    risks of investors can be further reduced by
    way of insurance , guarantee , etc.
    T receives payment from B and makes
    payment to I. T can invest the funds
    received by him in case there is a time lag
    between receipt and payment
    Benefit to L:
    It is an additional source of capital without
    disturbing the liability side
    Liquidity is enhanced
    Benefit to I:
    It is true that the investor bear the risk of
    non-payment. But the securities are backed
    by adequate collateral and credit
    enhancement insurance , guarantee
    Advantages of securitization
    Additional source of fund
    Greater profitability
    Enhancement of CAR (capital adequacy
    ratio)
    Spreading Credit Risks
    Lower cost of funding
    Provision of multiple instruments
    Higher rate of return
    Prevention of idle capital
    Standard categories of
    securitizations
    mortgage-backed securities (MBS), which
    are backed by mortgages;
    asset-backed securities (ABS), which are
    mostly backed by consumer debt;
    collateralized debt obligations (CDO), which
    are mostly backed by corporate bonds or
    other corporate debt.
    Corporate Advisory Services
    Project Consulting
    Mergers and Acquisition
    Disinvestment/ Bid Process Management
    Joint Venture/PPP Advisory
    Corporate Restructuring
    Infrastructure Advisory Services
    Monitoring of Public Issues
    Issue management services
    Issue management and merchant
    banking
    presentation

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