1. Definition of asset securitization
Asset securitization is a form of financing that issues tradable assets backed by a specific portfolio of assets or specific cash flows .
2. Types and scope of asset securitization
Classification based on underlying assets
It is divided into categories such as real estate securitization, accounts receivable securitization, credit asset securitization, future income securitization (such as highway toll collection), and debt portfolio securitization.
3. Asset securitization participants
sponsor
The initiator of asset securitization is the starting point of asset securitization and the original equity holder of the underlying assets .
Special Purpose Vehicle (SPV)
The SPV is between the promoters and investors and is the real issuer of asset-backed securities .
credit enhancement agency
Responsible for improving the credit rating of securitized products through two methods: internal enhancement and external enhancement .
credit rating agency
If the securitized product issued is a bond , it must be credit rated by a rating agency before issuance.
underwriter
Underwriters are investment banks responsible for designing and underwriting bonds .
service organization
The service provider supervises and maintains the asset projects and the cash flows they generate .
trustee
The trustee manages the asset portfolio and all rights related to it , and performs functions on behalf of investors.
4. Concept and classification of asset-backed securities
meaning
The securities based on asset pools issued in the process of asset securitization are called "asset-backed securities".
Classification
The United States usually refers to securitization products based on real estate mortgage loans as MBS , and other securitization products as ABS .
5. Economic motivations for the rise of asset securitization
From the sponsor 's perspective
1. Increase asset liquidity and improve capital utilization efficiency
2. Improve asset and liability management capabilities and optimize financial status
3. Achieve low-cost financing
4. Increase income sources
From an investor 's perspective
1. Provide diversified investment varieties
2. Provide more compliant investments
3. Reduce capital requirements and expand investment scale
6. U.S. Residential Mortgage-Backed Securities (RMBS)
In the United States, residential mortgage loans can be roughly divided into five categories:
Prime loan
ALT-A loan
subprime loans
Home equity loan
Institutional Guaranteed Loans