We provide services that help transform assets or investment strategies into financial instruments (Structured Products, Funds Units, ABS, ETP, Certificates, Notes, Bonds, Fund Feeders). The solutions are implemented in different jurisdictions, including Luxembourg, Jersey, Guernsey, Malta and Liechtenstein.
What is Securitisation?
Securitisation is the procedure of creating a marketable financial instrument in order to invest in a defined asset or asset pool. These transactions gained particular attraction in the 1970s, starting with the financing of mortgage pools. Over time, securitisation has evolved to include different kinds of assets. Today, securitisation transactions have become an integral part of the global financial system, particularly in the European and US capital markets.
Assets can be as varied as receivables, private debt, shares, commodities, real assets like art, infrastructure projects and real estate.
Securitisation transactions are flexible structured financing methods. It is critical that potential issuers and investors understand the range of options and related implications to reach informed decisions.
There are over a dozen different Service Providers which may be integrated in the process in order to improve the structure. The core Service Providers are the Paying Agent and the Platform Administrator.
In almost every securitisation process, one can expect there to be an obligor, an originator, an SPV and of course investors. The typical securitisation process takes place as follows:
Final Clients (Obligors)
Obligors are those who support the cash flows, which ultimately give value to the securities issued by the SPV. Their relationship with the originator is typically that of a debtor, an extension of credit related to a purchase of goods and services, or any other obligation, meaning that they owe money to the originator for either a loan, an extension of credit related to a purchase of goods and services, or any other obligation.
Originator
The originator is the counterparty to the obligor, meaning that it is the entity that has a legal claim to the obligations of the obligor. In a way, by financing the obligor by either direct loans or an extension of credit, the originator has created an asset which it retains on its balance sheet. The role of the originator in the securitisation process is to assign those assets to an SPV to remove them from its books and into a bankruptcy-remote legal entity, thereby transferring both risk and resources to the SPV.
The SPV subsequently issues securities which are backed by a pool of assets that have been transferred by the originator. This allows the originator to raise funds via the SPV and to lay off certain items from its balance sheet.
Investor
Investors are the ones who buy the securities issued by the SPV. They provide the cash inflow to the operating firm and are also entitled to the cash flows and redemption of the underlying pool of assets. Furthermore, they enjoy a more direct legal claim to the underlying pool of assets as well as further protection from bankruptcy by various credit enhancements offered by securitisation.
The Securitisation Vehicle issues a Note, which is purchased by prospective investors. The Paying Agent will provide the note with an ISIN number and facilitate the OTC transaction between the investor’s custodian bank and the securitisation vehicle. The raised funds are pooled into the Securitisation Vehicle, which subsequently invests the proceeds in the operating company (originator). The investment may be defined as debt, equity or a hybrid investment. It can be structured as a direct acquisition of the originator or as any other form of participation (“true” risk transfer or “synthetic” risk transfer).
Securitisation offers a variety of significant advantages when compared to traditional investment vehicles. Major benefits are the increased flexibility, the reduced cost and improved operational efficiency.
Integrated Administration
Simplify the administration of your investment vehicle and benefit from collaboration with our top service providers.
Life-Cycle Management
Outsource the life-cycle management of your investment and focus on developing your projects.
Creating a Track Record
Establish a proven track record for investors and grow your business.
Secondary Market
Trade your strategy on the secondary market and offer your investors easily transferable securities.
Compliance Coverage
Outsource onerous compliance procedures and focus on growing and managing your strategy.
Bankable Assets
Convert illiquid assets into bankable securities with ISINs.
Collateral Management
Structure and offer secured issuances with smart collateral for better investor protection.
Access to Capital
Gain access to global capital markets and diversify your investor base.
Speed and Efficiency
Optimise time-to-market and operational efficiency to capture market opportunities as soon as they arise.
Integrated Administration
Simplify the administration of your investment vehicle and benefit from collaboration with our top service providers.
Life-Cycle Management
Outsource the life-cycle management of your investment and focus on developing your projects.
Creating a Track Record
Establish a proven track record for investors and grow your business.
Secondary Market
Trade your strategy on the secondary market and offer your investors easily transferable securities.
Compliance Coverage
Outsource onerous compliance procedures and focus on growing and managing your strategy.
Bankable Assets
Convert illiquid assets into bankable securities with ISINs.
Collateral Management
Structure and offer secured issuances with smart collateral for better investor protection.
Access to Capital
Gain access to global capital markets and diversify your investor base.
Speed and Efficiency
Optimise time-to-market and operational efficiency to capture market opportunities as soon as they arise.
Actively Managed Certificates (AMCs)
At ISP Group, we structure your off-balance-sheet, risk-segregated trading strategy. The certificate can be easily distributed among qualified investors.
Private Equity
The securitised private equity investment becomes a bankable asset. This is a highly efficient way to access global capital markets, as the issued EMTNs are provided with an ISIN and traded through global clearance and settlement platforms, such as Euroclear.
Islamic Finance
Islamic Finance does not allow for investments into interest-bearing (“riba”) products. Islamic securities are based on participation in the underlying business risk instead. Hence, the core requirement of Islamic Finance products is that of being asset-based or asset-backed. As such, an asset-backed security is the natural fit for structuring Islamic Finance transactions.
Real Estate
Securitisation of real estate converts the asset into a tradeable security on the financial markets. This is a flexible and efficient way to raise capital, to fund a real estate development project or to get the real estate portfolio off the balance sheet.
Green Bonds
Institutional investors can securitise their investment strategy or assets into an EMTN and apply for green bond certification in collaboration with Sustainalytics.
Art, IP, and other Tangible and Intangible Assets
Art has become increasingly popular as an asset class in the post-financial-crisis investment landscape. Investment opportunities in art, collection items or intellectual property (IP) such as brand royalties, music or film rights are typically illiquid and difficult to access.
Fund Shares
The securitisation of fund shares provides a bridge between the fund and the investor, allowing fund managers to sell to institutional investors through a new channel of broker dealers and private banks.
Digital Assets
Securitisation of cryptocurrencies and other tokens.
Private Debt
Private loans can be securitised into any type of bond, incl. convertibles. This is a highly efficient way to access institutional fixed-income investors worldwide.
Our team consists of experts in the field of securitisation. We take a dynamic, dedicated and tailored approach that enables us to realise our clients’ goals and visions. With our can-do attitude, we strive to serve our clients with the highest level of professionalism in the most efficient way.
Trading financial products carries significant risks, including the risk of a complete loss of investment, and may not be suitable for every investor. Therefore, please consider our risk warnings carefully, ensure that you have clearly understood all associated risks and that your legal place of your residence or registered office allows you to access this information.
