Securitisation, which started in the USA in the mid-1970s, is the conversion of identifiable and predictable cash flows into securities. This is a growing way of financing aircraft, only touched on in Chapter 11 (leasing), and so will be addressed in this chapter.
The advantages of securitisation to lenders are:
Risk is spread over a number of borrowers
Risk may be spread over a number of world regions
Risk may be spread over different aircraft types
Greater size reduces costs of administration
The loan or asset is removed from the balance sheet of the lender