securitized


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Related to securitized: Securitized Mortgage

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.
References in periodicals archive ?
Recently we have gained a good deal of momentum with our Strategic Fixed Income and Securitized Assets Strategies, as clients have increasingly sought creative investment solutions within the fixed income space.
Barclays Plc (LSE: BARC) has announced that it has named a head for US securitized product trading.
Securitized credit products include asset and mortgage backed securities (ABS and MBS) and sub-classifications for residential and commercial real estate mortgage products (RMBS and CMBS).
Diane Rinnovatore was named by the bank as co-head of securitized products origination.
Starting in 1996, American Skandia securitized several tranches of mortality and expense charges and surrender charges on its variable annuity business.
Bank-provided credit enhancements can produce big losses because the bank puts itself in a first-loss position whenever a loan in the pool of securitized assets defaults.
For example, a securitized issue of $100 million might have five tranches -- two investment grade and three non-investment grade.
Now, companies with virtually any type of receivable can be sold off a firm's balance sheet and securitized.
5) The allocation shall be based on the assumption that a normal servicing fee will be received and that the rights to the remaining cash flows from the underlying mortgage loans will be sold or securitized.
Thus, securitized transactions must have sufficient credit enhancement to obtain a credit-rating level that makes the securities attractive to investors.
AMRESCO is also an experienced primary and special servicer of securitized loans.
It's taken them a while to figure it out because it is much more complicated and labor intensive [than normal securitized lending], but lenders are always looking for higher profit margins and this is one way to do it.