Securitisation and Asset Backed Lending

The securitization asset backed lending techniques, while complex, has won a secure place in corporate financing and investment portfolios because it can, paradoxically, offer originators a cheaper source of funding and investors a superior return. Not only does securitization transform illiquid assets into tradeable securities, but it also manages to transform risk by means of the separation of good financial assets from a company or financial institution with little loss of revenue. The assets, once separated from the originator, are employed as backing for high-quality securities designed to appeal to investors.

CONTENT CONTENT

The Basic Elements

• Asset securitization defined
• Contrast with traditional asset-based financing
• Contrast with home mortgage securitization
• Typical legal structure and cash flows
• The assets
• The securities
• Originators and investors

Cost-Benefit Analysis

• Securitization in the context of corporate financing choices
• The economics of off-balance-sheet financing
• Financial cost-benefit analyis for corporate originators
• Financial cost-benefit analysis for financial institutions
• Servicer profitability analysis
• Why and when should we finance with asset-backed securities? Some guidelines
• Who should invest in asset-backed securities?

The Securitization Process

• The technique summarized
• Collateralized bonds
• Pass-through securities
• Pay-through securities
• Legal structures for asset securitization
• Regulatory aspects
• Tax aspects
• Rating agency requirements

Risk Management in Asset-Backed Financing

Sources of risk

• Credit risk
• Sovereign risk
• Servicer performance risk
• Interest rate and currency risk
• Prepayment risks
• Legal risks
• Liquidity risk
• Swap counterparty risk
• Financial guarantors
• Techniques of risk reduction
• Credit risk management

• Techniques of risk reduction
• Credit risk management

• Overcollateralization
• Senior-subordinated structures
• Financial guarantees

Project Finance: Asset-Backed Financing Applications

• Non-recourse structure
• Roles of sponsor and other participants
• Sources of funding

TRAINING METHODOLOGY

The training methodology combines lectures, discussions, group exercises and illustrations. Participants will gain both theoretical and practical knowledge of the topics. The emphasis is on the practical application of the topics and as a result participant will go back to the workplace with both the ability and the confidence to apply the techniques learned to their duties.