In: Finance
What does securitization of debt mean?
The assets which generate steady cash flows are pooled together and against these pooled assets, market security can be issued and the process is called securitisation.
It is the process of converting mortgage loans together with future receivables into negotiable instruments or assignable debt. It is an off balance sheet financing technique with the objective of mobilizing resources at a comparatively lower cost through a wider investors base, by removing loan assets from the balance sheet of the loan originator.