Introduction
What is securitization?
Securitization is a financial tool which consists in the issuance of securities backed by assets put together in a "pool", which assets generate future cashflows. Generally, the "pool" of assets takes the form of an estate independent from the entity generating those assets (i.e., the company seeking the financing, or one of its affiliates), which is known as the "originator", by means of a transfer into a "vehicle" (an entity separate from the originator). The transfer can be done in the form of a sale of assets to a special purpose company or closed-end mutual fund, or as a fiduciary assignment to a trust created for this purpose. After this, the vehicle issues the securities in most of the cases, and interest on and amortization of the securities are satisfied with the cashflows generated by the underlying assets.
