ABSTRACT
While there is no generally accepted definition of the term ‘securitisation’, in essence securitisation is the issue of a security backed by a defined cash flow. A securitisation typically entails the establishment and management of a stand-alone bankruptcy remote special purpose company (SPV) for the purposes of acquiring assets that entitle their owner to future cash payments. A local or municipal government or government agency, bank, building society, insurance company, trading company or other originator (Originator) generally originates the assets, which must have identifiable and reliable cash flows. The type of assets commonly securitised includes leases, loans, royalties, bonds, notes or other debt instruments or securities and receivables, derivatives and other financial assets. The acquisition is typically financed primarily through the issue of asset-backed securities in the form of bonds, notes or commercial paper (Notes) to investors (Noteholders) in the US or European capital markets.
