Who are the participants in the securitization process?

A securitisation transaction involves several parties, the most important of which are the Original lender, the Originator, the Sponsor, the Securitisation Special Purpose Entity (or ‘issuer’), the Underwriter, the Credit Rating Agencies, the Third-party Credit Enhancers, the Swap counterparty, the Servicer, the …

Who is the issuer in a securitization?

In securitization, an originator pools or groups debt into portfolios which they sell to issuers. Issuers create marketable financial instruments by merging various financial assets into tranches. Investors buy securitized products to earn a profit. Securitized instruments furnish investors with good income streams.

Which entities play a big role in securitization?

The exhibit highlights the key roles in the securitization process: issuer, underwriter, rating agency, servicer, and trustee.

Who is obligor in securitisation?

The Obligor(s): The Obligor is the Originator’s debtor (borrower of the original loan). The amount outstanding from the Obligor is the asset that is transferred to the SPV. The credit standing of the Obligor(s) is of paramount importance in a securitisation transaction.

Who are shadow lenders?

Examples of shadow lenders include Special Purpose Entities, Non Banking Financial Companies (NBFCs), Hedge Funds etc. These institutions function as intermediaries between the investors and the borrowers, providing credit, thus, leading to financial inclusion and hence generate liquidity in the system.

What is the role of originator in securitization process?

In a securitization transaction, the originator generates the assets to be securitized, usually loans, which are expected to create the revenue stream that forms the basis for the transaction and permits regular payment of principal and interest to be made to the holders of the asset-backed securities (ABS) issued in …

What is a securitisation company?

The law of 22 March 2004 defines a securitisation as a business transaction in which a securitisation vehicle acquires or assumes risks and, based on these risks, issues securities whose performance is based on these risks for example, receivables as well as liquid and alternative assets.

Who is the obligee and who is the obligor?

In a financial context, the term “obligor” refers to a bond issuer who is contractually bound to make all principal repayments and interest payments on outstanding debt. The recipient of the benefit or payment is known as the obligee.

Who are obligor and obligee explain?

An obligor is an individual is obligated, or who has been ordered by a court, to pay a debt to another party. For example, an obligee is to receive $500 per month from the obligor, per the court’s order.

Which country has largest shadow banking market in the world?

Although the aggregate growth rate has been slowing around the world, in 2018, the United States still has the largest shadow banking sector, compared to other countries, amounting to 15.2 trillion USD and representing 74.2\% of its GDP and 29.9\% of the total shadow banking assets of the 29 jurisdictions covered by the …

What is haircut on debt?

When a bank takes a ‘haircut’, it means it accepts less than what was due in a particular loan account. Example: if a bank was owed Rs 10,000 by a borrower and it agrees to take back only Rs 8,000, it takes a 20\% haircut.

What are originators?

Originator. A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a pool. Also, an investment bank that has worked with the issuer of a new securities offering from the beginning and is usually appointed manager of the underwriting syndicate.