Asset Backed Securitization
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Transcript of Asset Backed Securitization
Asset Backed Security
An Asset-backed security is a financial security whose value and income payments are derived from and
collateralized by a specific pool of underlying assets.
Structure of Asset-Backed Securities
High Credit rating
Normally AAA Rating
Low yield due to higher rating
Low rating compared to Class A
High Yield due toLower rating
Lowest or no Rating
Usually retained By issuer or Sponsor
Highest return
Special Purpose Vehicle
A special purpose vehicle is a legal entity created to fulfill a narrow or specific or temporary objects.
Credit enhancement Providing services
Sale of securitized receivables
Notional Principle of Bonds
Fixed rate Coupon Payments
Definitions
Commission means securities and exchange commission
Commission
Includes all such receivables against which income may accrue at a future date
Future receivable
Investor is a person holding any asset backed securities issued by special purpose vehicle
Means document containing information on a security calculated to invite offers
Investor
Offering document
Ordinance
Ordinance means Companies Ordinance 1984
A person transferring Future receivables to a Special Purpose Vehicle
Originator
A process whereby a SPV issues TFCs or other instruments to make payment to originator
and own the title of future receivables
Means a SPV registered by the commission for the purpose of Securitization
Securitization
Special Purpose Vehicle