Securitisation and structured credit investments are good business
Securitisation means a company (both financial and non-financial sponsors) separates (pools) an identified (discrete) group of assets with similar characteristics (including similar terms, structures and credit characteristics) from its balance sheet. In most cases the assets are financial institution-originated, self-liquidating loans (secured and unsecured, fixed or revolving interest rate).
The securitisation places the assets under the legal control of a separate entity usually known as a special purpose vehicle (SPV) or another type of structure (such as in Ireland, using the tax-efficient Section 110).
The structure of asset-backed securities (ABS) is intended, among other things, to insulate investors from the corporate credit risk of the sponsor that originated or acquired the financial assets.
The securitisation is essentially selling the assets to investors who rely on the
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