Transcription of The Securitization Process
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Asset-Backed Securities The Securitization Process Prof. Ian Giddy Stern School of Business New York University Asset-Backed Securities q The basic idea q What's needed? q The technique q Applications q Typical sequence Copyright 2001 Ian H. Giddy The Securitization Process3. Securitization of Assets q Securitization is the transformation of an illiquid asset into a security. q For example, a group of consumer loans can be transformed into a publically-issued debt security. q A security is tradable, and therefore more liquid than the underlying loan or receivables. Securitization of assets can lower risk, add liquidity, and improve economic efficiency.
n Basic lender’s credit quality standards that are capable of bein g evaluated and approved by rating agencies and specialized financial guaran ty companies n Assets must be transferable and unencumbered. ... B AA 22% C A 16.5% D BBB 12% E BB …
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