Loan Securitization

A solution for optimizing capital and lowering credit risk. 

Have you noticed?

  • Funds have become more difficult to secure
  • Banks are reducing access to funds 
  • Institutions seek to optimize capital & lower risk
  • Finance companies are looking for options to expand without sacrificing operations

There's an option that has been gaining more attention recently: Securitization

Download Securitization White Paper

Securitization BG 2-1

Securitization: Assets Pooled and Repackaged Into Interest-Bearing Securities

He's been overseeing our developments toward securitization. Hear all about it from our glorious know-it-all, Robert. 

 

Schedule some time to go over the details of how it all works.

See What Securitization Can Do For You

What is Securitization?

Securitization is the ability to bundle a group of assets (aka loans) into securities that can be sold to investors. There are several benefits to the financial institution of turning loan assets into marketable securities:

  • Lower Capital Requirements – Some entities due to legal or regulatory requirements need to limit the amount of capital. Securitization moves those assets “off-balance-sheet”.
  • Liquidity – Assets that likely would have taken years to generate cash flow can now be quickly done as a lump sum. This frees up capital and generates a new financing source instead of borrowing from standard financial institutions.
  • Increased Credit Rating – Removing receivables off the balance sheet may help raise the institution’s credit rating, allowing it to borrow funds at a lower rate. In essence, the institution is transferring the potential default risk to the investors.
  • Fee Income - By moving accounts off the balance sheet, interest income is now being replaced as fee income when servicing those loans for the investors.

How Does Lowering Credit Risk Benefit You?

The securities involved in a securitization are split into tranches where the assets share similar qualities with one another (interest rate, loan classification, etc.). Different tranches can carry different risks and exposure within a portfolio.

There are several benefits for an investor to participate in securitization, here are a couple:

  • Higher Rate of Return – Better chance of having a higher rate of return on revenue-generating assets.
  • Portfolio Diversity – Allows investors to diversify their portfolios and gain access to high-quality assets that they normally could not invest in.

Want to ask Robert more about securitization?

Schedule a free demo and find out for yourself. 

See What Securitization Can Do For You