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Securitisation Stages
1. Identification Stage - There is bank which is in lending process . few entities are only allowed for securitisation , example - 500 CR lending process is there in bank , where there is still many borrowers who need loan , Now if bank does not have enough cash to give loan to those borrowers it will go for securitisation and will identify the type of asset like is it vehicle loan , personal loan or home loan and accordingly start . They basically make tranches .
Tranches are when there are different variety, similar categories are grouped .
2. Transfer Stage - In transfer stage the illiquid asset will transfer from bank to SPV and will then SPV will convert it into liquid asset in the form of bond.
3. Issue Stage - Here issue of security by the investors takes place in the form of bond .
4. Redemption - Here nothing but redeemed( investment is repurchased or bought back by the issuer or the company that originally issued it.)
5. Credit Rating - Bonds are made attractive to investors , and therefore rated .
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