Securitisation

PrepNuggets

A process that involves moving assets into a special legal entity (e.g. SPV), which then uses the assets as guarantees to secure a bond issue.

Parties involved

Seller – the company where the securitised assets originate. Sets up SPV and sells the assets to the SPV.

Customers – obligated to make regular payments (borrowers)

Servicer – appointed by seller to collect payments and liaise with customers, and passes on payments to issuer/trust

Issuer/trust – separate legal entity set up by the seller to buy and securitise the assets to be sold as ABS to investors.

Investors – Buyers of the ABS

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