For professionals or a
commercial company
Let’s take a portfolio of securities held by a commercial
company that has recorded an acquisition value of this portfolio
on its balance sheet.
In order to cancel out the possible negative consequences
of the recognition on its balance sheet of the risk inherent
in holding securities, the commercial company will transfer
this entire portfolio made up of fixed or variable income
securities to a securitisation vehicle that will pay it
its current value.
The securitisation vehicle will be assigned ownership of
the portfolio while it will be refinanced by external investors
ready to purchase this portfolio and, upon settlement, to
be paid recurrent profits and possible appreciation of constituent
financial assets.
On the other hand, the commercial company will turn financial
assets invested long-term into liquid assets. Following
this transaction, more liquid assets therefore appear on
the balance sheet; this improves the ratio of liquid assets
which can then be reinvested in other assets.
External investors receive securities representing their
investment. They will be paid income on the portfolio by
the securitisation vehicle after deduction of incumbent
fees.
This allows risks to be divided between investors who will
have been able to acquire only part of the portfolio while
it was transferred (indivisibly) in full by the commercial
company. This transaction allows a group of individual investors
to acquire significant participating interests without having
to bear the full investment alone.
For investors
The securitisation vehicles asset is represented by certificates,
securities, registered or bearer securities and whose value
is directly linked to the underlying asset and its returns.
A group of investors (or a family) can also transfer its
movable assets to a securitisation vehicle in order to assume
risks linked to the ownership of these assets and split
this risk among them.
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