securitization

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Securitization

Creating a more or less standard investment instrument such as the mortgage pass-through security, by pooling assets to back the instrument. Also refers to the replacement of nonmarketable loans and/or cash flows provided by financial intermediaries with negotiable securities issued in the public capital markets.

Securitization

The process by which a company packages its illiquid assets as a security. For example, when a company makes an initial public offering, it effectively packages the company's ownership into a certain number of stock certificates. Securities are backed by an asset, such as equity, or debt, such as a portion of a mortgage. Securitization allows a company access to greater funding to expand its operations or investments, or some other reason.

Securitization.

Securitization is the process of pooling various types of debt -- mortgages, car loans, or credit card debt, for example -- and packaging that debt as bonds, pass-through securities, or collateralized mortgage obligations (CMOs), which are sold to investors.

The principal and interest on the debt underlying the security is paid to the investors on a regular basis, though the method varies based on the type of security. Debts backed by mortgages are known as mortgage-backed securities, while those backed by other types of loans are known as asset-backed securities.

securitization

an arrangement which involves putting together a claim on particular assets of a business which is then sold as a negotiable security in the financial markets. Securitization is mainly undertaken by financial institutions; assets involved typically include commercial paper, mortgages, car loans, export credits and credit card receivables.

Securitization enables the issuing institution to raise ready cash, thus improving its liquidity. Purchasers of such securities seek to profit by obtaining claims on assets at less than their redemption value, but they may choose to on-sell their claims in the market.

securitization

a financial technique for raising loan capital that involves a firm issuing a CORPORATE BOND backed by certain specified assets owned by the firm. The interest charges on the bond and the eventual repayment of the bond itself are met by the income streams earned by the underlying assets, while the capital sum raised by the bond can be invested in other areas of the firm's activities. The alternative way to release the capital represented by the underlying assets would be to sell them off or to DEMERGE them into a separate business.

securitization

The process of taking many individual assets and combining them into a group,or pool,so that investors may buy interests in the pool rather than in the individual assets.The creation of collateralized mortgage backed securities is one example.The process increases the number of possible investors due to the ability to sell shares in the pool at relatively modest prices.In addition, because of the high degree of predictability inherent in large groups of things, the process of securitization increases predictability,lowers risk,and therefore increases value.

Example: On a single flip of a coin, how much would you bet that the coin would land heads up? On 20,000 flips of a coin, how much would you bet that it would land heads up fifty percent of the time, give or take two percent? This is a fundamental concept of securitization.

References in periodicals archive ?
These forward-looking statements may include, but are not limited to, the Company's ability to complete a securitization transaction, whether such a transaction will result in a lower cost of capital for the Company and the timing to complete any securitization transaction.
The transaction is the first Carrefour Banque credit-card securitization transaction and the first transaction of this kind in France since 2009.
The securitization transaction also included the issuance of three subordinated classes of notes in the aggregate principal amount of $75 million.
As life insurance companies realize ways to optimize earnings through use of the capital markets and as investors become more comfortable with the nature of the underlying risks, the breadth of securitization transactions will grow.
This is the sixth mortgage securitization transaction completed by the Company to date, and is the first securitization transaction completed since March 1998, when the Company began selling its loans on a whole-loan sale basis.
In 2004, the innovative firm became the first ever to originate a portfolio of life settlement assets for a securitization transaction rated A1/Baa3 rating by Moody's Investor Services.
Joining a distinguished panel of finance leaders at the "Emerging Investment Strategies in the Secondary Life Market" conference, Eliav spoke about his firm's experience in 2004 as the first ever to originate a portfolio of life settlement assets for a securitization transaction.
You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory and competitive and other factors, that may cause First Marblehead's performance or achievements, including the actual revenues and yields from the securitization transaction or the timing of events, to be materially different than those expressed or implied by forward-looking statements.
Best's standard review of an entity's financial strength, an important tool is Best's Capital Adequacy Ratio (BCAR), which along with other capital ratios is impacted directly by a XXX securitization transaction.
You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory and competitive and other factors, that may cause First Marblehead's performance or achievements, including the actual revenues from the securitization transaction or the timing of events, to be materially different than those expressed or implied by forward-looking statements.
Although some catastrophe bonds were issued on the property/casualty side, securitization transactions in the life insurance market were not common.
Molitor, who is resident in the firm's New York and Philadelphia offices, focuses on the securitization of financial assets and has represented clients in connection with hundreds of public mortgage- and asset-backed securitization transactions.