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Securitization is the sale of financial assets (loans, receivables, debt ........ etc) owned banks or companies to units of special purpose (SPE) to be converted from the low liquidity of the assets to a new financial assets (bonds) with high liquidity negotiable in the capital markets to ensure these loans or receivables or debt and carry a fixed coupon and have a fixed maturity
The securitization through the formation of homogeneous groups Pools of mortgages as an example, and the maintenance of the securitization of these loans and financing companies by issuing bonds - Asset Backed Securities with a fixed periodic rate of return. The investor gets the bond on the benefits of periodic holder in addition to the principal amount of the bond, and this should be borne in mind that correspond bond maturities and returns with debt and interest payments due dates, and so is the creation of the so-called secondary market for mortgage or bond market, which could represent the demand side of the ( Insurance and pension funds, investment funds, financial and investment institutions, insurance companies and individual investors to buy bonds and who are looking for consistent returns). Securitization is based on five main pillars: - First corner: - a relationship original plastic: any relationship between lender and borrower- The second pillar: - creditor desire to get rid of debt securities- The third pillar: - the entity referred to it by issuing new bonds negotiable- The fourth pillar: - based on the new securities to the collateral- The fifth pillar: - The presence of an investor for the purchase and trading bonds issued by securitization companies.
