Eurofinanz Group

Securitization

To date, local banks have maintained careful policies to grant long term loans. Mostly, due to the risk of liquidity represented by the assignment of credits, which immobilizes funds and reduces lending capability.

Increase in system efficiency requires not only the restructuring of lesser competitive banks but the innovation of the whole system based on new financial instruments implementation.

Costs and lack of credit -specially for emerging economies- are the two great barriers that securitization looks for elimination. Securitization allows low liquidity investments, as immovables, into securities tradable in capital markets, with high liquidity and acceptance by a lot of investors.

Securitization is a financial technique whereby a pool of credits originated by one or more Originators is separated from their balance–sheet and transferred to a legal vehicle (SPV) which will obtain necessary funds to purchase them through the issuance and sale of securities guaranteed by such transferred portfolio.

Securities' purchasers may be institutional investors such as mutual or pension funds, or thousands of small investors who buy certificates of participation through public offerings.