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What is Securitization?

Securitization is a structured process in which similar assets are grouped in an issuing trust, which in turn issues debt instruments among the general investing public (local and foreign), on an organized securities market (Mexican Securities Exchange).

The grouped assets generate cash flows that are used to pay the costs inherent to maintenance of the securitization and payment of yields to investors.

The main assets that can be securitized include:

• Mortgages
• Accounts receivable
• Services
• Productive projects
• Value producing infrastructure

In securitization:

1. The originator (bank, limited purpose financial company (Spanish acronym sofol),  or multiple purpose financial company (Spanish acronym sofom), among others) assigns mortgages to an issuing trust.
2. The trust issues debt instruments on the securities exchange.
3. The funds obtained from the investors are conveyed to the trust.
4. And finally, the trust delivers funds to the originator (Bank, Sofol, or  Sofom).

Last review: 07/02/2013 4:42
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