What does securitization mean?
Definitions for securitization
se·cu·ri·ti·za·tion
This dictionary definitions page includes all the possible meanings, example usage and translations of the word securitization.
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Wiktionary
securitizationnoun
The fact or process of securitizing assets; the conversion of loans into securities, usually in order to sell them on to other investors.
securitizationnoun
The act of taking visible countermeasures against terrorism.
Etymology: From securitize.
Wikipedia
Securitization
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs). Investors are repaid from the principal and interest cash flows collected from the underlying debt and redistributed through the capital structure of the new financing. Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS). The granularity of pools of securitized assets can mitigate the credit risk of individual borrowers. Unlike general corporate debt, the credit quality of securitized debt is non-stationary due to changes in volatility that are time- and structure-dependent. If the transaction is properly structured and the pool performs as expected, the credit risk of all tranches of structured debt improves; if improperly structured, the affected tranches may experience dramatic credit deterioration and loss.Securitization has evolved from its beginnings in the late 18th century to an estimated outstanding of $10.24 trillion in the United States and $2.25 trillion in Europe as of the 2nd quarter of 2008. In 2007, ABS issuance amounted to $3.455 trillion in the US and $652 billion in Europe. WBS (Whole Business Securitization) arrangements first appeared in the United Kingdom in the 1990s, and became common in various Commonwealth legal systems where senior creditors of an insolvent business effectively gain the right to control the company.
Wikidata
Securitization
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or collateralized mortgage obligation, to various investors. The principal and interest on the debt, underlying the security, is paid back to the various investors regularly. Securities backed by mortgage receivables are called mortgage-backed securities, while those backed by other types of receivables are asset-backed securities. Critics have suggested that the complexity inherent in securitization can limit investors' ability to monitor risk, and that competitive securitization markets with multiple securitizers may be particularly prone to sharp declines in underwriting standards. Private, competitive mortgage securitization is believed to have played an important role in the U.S. subprime mortgage crisis. In addition, off-balance sheet treatment for securitizations coupled with guarantees from the issuer can hide the extent of leverage of the securitizing firm, thereby facilitating risky capital structures and leading to an under-pricing of credit risk. Off-balance sheet securitizations are believed to have played a large role in the high leverage level of U.S. financial institutions before the financial crisis, and the need for bailouts.
Numerology
Chaldean Numerology
The numerical value of securitization in Chaldean Numerology is: 5
Pythagorean Numerology
The numerical value of securitization in Pythagorean Numerology is: 9
Examples of securitization in a Sentence
Both legs of the plan are potentially fragile, it will be difficult to complete such a big capital increase given their track record with past cash calls, and the securitization is a monster operation, a puzzle full of moving pieces that need to fall into place. The execution risk is significant.
Most people still think that for this industry to grow that securitization is essential, but you can't always count on that market to be open when you need it.
Federal Reserve Governor Jerome Powell:
We should promote greater competition in this market. The economics of securitization do not require a duopoly, we ought to do whatever we can to make the possibility of future housing bailouts as remote as possible.
The most high profile (takeout securitization) deal was Dunkin' Brands, which was done in 2006, but I think now if you have a brand, or group of brands, that have a good recognition and scale, you should be looking seriously at this market.
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Translations for securitization
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"securitization." Definitions.net. STANDS4 LLC, 2024. Web. 19 Mar. 2024. <https://www.definitions.net/definition/securitization>.
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