[Verse 1] Banks create loans but want to free up cash Securitization helps them make that dash Originator bundles loans together tight Creates a package ready for the light Special Purpose Vehicle takes the stage Isolates the assets from the bank's cage Transform illiquid loans to liquid gold Securities that investors want to hold [Chorus] SPV takes the loans away Tranching splits the risk today Senior, mezzanine, subordinate Credit enhancement makes it safe to take Securitization, transformation Turning loans to liquid sensation [Verse 2] Credit enhancement makes the deal more sweet Subordination puts junior beneath Overcollateralization adds more collateral Excess spread provides a financialaterial Surety bonds guarantee the payment flow Making senior tranches safer as they go Pass-through certificates send payments straight CMOs control the timing and the rate [Chorus] SPV takes the loans away Tranching splits the risk today Senior, mezzanine, subordinate Credit enhancement makes it safe to take Securitization, transformation Turning loans to liquid sensation [Bridge] Sequential pays in order, one by one PAC tranches get protected from the run Support tranches absorb prepayment shock CPR measures how fast payments rock SMM is monthly, PSA's the standard way Auto loans and credit cards join the fray [Verse 3] Mortgage-backed securities lead the dance Pass-throughs give investors payment chance CDOs can be cash flow or synthetic Real assets or just derivatives kinetic Covered bonds stay on the balance sheet Dual recourse makes the structure complete Asset-backed securities diversify the game Student loans and autos stake their claim [Chorus] SPV takes the loans away Tranching splits the risk today Senior, mezzanine, subordinate Credit enhancement makes it safe to take Securitization, transformation Turning loans to liquid sensation [Outro] From origination to investor's hand Securitization helps capital expand Breaking down the barriers of illiquid debt Creating markets where investors can bet
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