Abstract This paper starts by presenting the basic components of securitization. It then outlines the common reasons for using securitization. Next, various parties in a securitization transaction are identified, and their roles explained. One important component of securitization - eligible asset, is then examined in detail. The paper also suggests the application of securitization in different industries. Finally, the history and recent development of securitization in Malaysia is studied in detail.
From the Paper "Securitisation is an innovative technique in raising finances for a company. Its primary objective is twofold ? convert dull assets into usable cash and clean up balance sheet of a company. By definition, securitisation refers to the parcelling and selling pools of eligible assets by the company owning the assets to a special purpose vehicle (SPV) company, which issues debt securities to finance the purchase of such assets. The SPV uses cash flow from the assets to service the debt it created to purchase these assets. The debt securities are usually rated and tradable in the secondary market."
