SECURITISATION

OF
DEBT
 Securitisation Defined

• “A carefully structured process whereby loans and

other receivables are packaged, underwritten and
sold in the form of asset backed securities.”
 What can be Securitized?

• All assets generating stable and predictable can be

taken up for securitization.
• Securitization of auto loans, credit card receivables,
computer leases, unsecured consumer loans and other
receivables relating to telecom and future export have
gained prominence.
 Modus Operandi
For the operational mechanics of securitization, the
following parties are required:

 The originator
 A Special Purpose Vehicle (SPV) or a trust
 A merchant or investment banker
 A credit rating agency
 A servicing agent-Receiving and Paying agent
(RPA)
 The original borrowers or obligors
 The prospective investors i.e., the buyers of
securities.
 Securitization Process
The various stages involved in the working of
securitization are as follows:

1. Identification Stage/Process
2. Transfer Stage/Process
3. Issue Stage/Process
4. Redemption Stage/Process
5. Credit Rating Stage/Process
 Role of Merchant Bankers
• They generally act as Special Purpose Vehicle
(SPV) in asset securitization.
• They act as agents for the issuer connecting
the sellers and buyers.
• They can also involve in structuring the issue
to see that the issue to meet all legal,
regulatory, accounting, tax and other
requirements.
 Role of Other Parties
• The other parties in the game of
securitization are the original borrowers and

the prospective investors.

• The original borrowers refers to those who

have availed of the loan facilities from the
lending institution i.e., the originator.
 Types of Securities
There are three important types of securities as
listed below-

I. Pass through and pay through certificates

II. Preferred stock certificates and

III. Asset based commercial papers

THANK YOU