In its simplest form, securitisation is a method of funding receivables (assets), such as mortgage debts,leases, loans or credit card balances, through creating freely tradable securities backed by these assets.
Securitisation provides local institutions with additional flexibility in managing credit, liquidity and other risks involved in originating and funding assets. Depending on the particular structures utilised, these risks can be either retained by an originating institution or passed on to investors and others involved in the schemes.
The securitisation market in South Africa continues to grow in both size and innovation. This publication therefore does not attempt to cover each possibility arising from any individual securitisation transaction, but to provide readers with a basic explanation of securitisation and the benefits thereof.
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