Securitisation

The basics of asset

securitisation
 The basics of asset securitisation
ORIGINATOR

Administration
Flow of credits / servicing
fee

BANKS ARRANGER
Liquidity / SPV Management
swaps / fee
payment
agency
Bonds / Loans

INVESTORS
 Parties: Originator

• Originator sells the credit rights (assets) to

SPV (Special Purpose Vehicle)

• SPV repays sale price immediately to

originator
 Parties: Special Purpose Vehicle (SPV)

• SPV finances asset purchase with….

– Bank loan

Or with…

– Bond issue
 Special Purpose Vehicle (SPV)

• SPV grants….

– Security to investors over credit rights

– As collateral over the loan made by investors

 Special Purpose Vehicle (SPV)

• Little share capital

• Single purpose

• Its shares do not belong to originator

• Pays to originator any funds in excess of the

credit rights which may not be necessary to
repay the loan to investors
 Servicer (originator)

• SPV authorizes originator to collect credit

rights in its name

• SPV uses the funds collected from credit rights

to repay principal and interest of loans or
bonds

• SPV pays a fee to servicer / originator

 Credit enhancement

• To ensure that credit rights are enough to

repay investors

• A third party may grant a guarantee to SPV

• Originator may grant SPV a subordinated loan

 Rating agency

• Rates the loan granted by investors to SPV

• Rating is usually higher than the rating that a

direct loan to originator would obtain
 Economic effects of securitisation

• Originator obtains funding with the credit rights

as security

• Originator transfers to investors the risk of non

payment on the credit rights

• Originator removes the assets and the loan

from its balance sheet
Titulización