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.

securitized

Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds.

Case Study Tobacco companies agreed in the late 1990s to provide states with billions of dollars in cash payments over many years. The huge monetary settlements came in response to lawsuits filed by the states for health-related expenses resulting from their citizens' tobacco use. Unwilling to wait for all the promised money, politicians in several states proposed issuing debt securities backed by the promised revenue streams. Promised cash flows from the settlement would be securitized with bonds sold to investors. Florida governor Jeb Bush proposed that his state sell half its $17.4 billion settlement to be received over many years for approximately $2.4 billion. Some financial analysts worried potential lawsuits could force tobacco companies into bankruptcy, in which case promised payment from the settlements would be at risk. Securitizing the settlement payments would transfer the risk from the states to investors who purchased the bonds. Buying the bonds that were backed by promised tobacco company payments would allow individual investors to participate in the settlements.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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References in periodicals archive

Based in New York, Allman will build upon the firm's world-class ABS underwriting platform and help expand its Securitized Products business to cover additional niche assets.

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Resolutions in the same timeframe for 50 securitized loans totalling $370.7 million were mainly achieved through full payoffs (62%) and loans returned to performing status (18%).

Fitch Upgrades Fannie Mae, Multifamily's Special Servicer Rating

Additionally, screenshots in the CFLA Securitization Audit also provide current loan modification static data for the investor / trusts, including how, when, where, and what amount of loan modifications have been approved and significantly enhance the Securitized REST Report.

CFLA Announces Partnership with REST to Offer Securitized REST Report, Available Only Through CFLA

Our objective is to examine the Shiryaev-Zhou indices of securitized real estate indices of four countries in Europe and North America: US, UK, Canada and Germany, and to verify whether the trading strategy we construct using the Shiryaev-Zhou index can beat the "buy-and-hold" strategy.

Can we beat the "buy-and-hold" strategy? Analysis on European and American securitized real estate indices

(2) Credit enhancements are protection, in the form of financial support, to cover losses on securitized assets in adverse conditions (Standard and Poor's 2008).

The role of bank credit enhancements in securitization

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But demand for collateral was exceeding the supply and securitized loans filled the gap.

Shadow banking

REMICs are a vehicle by which commercial mortgages are securitized.

Treasury guidance on REMIC gives owners more flexibility