Securitization As An Integral Part Of A Corporate Capital Structure

Introduction

Companies are increasingly incorporating securitizations and securitization-like financing arrangements as part of their capital structure. Utilizing these types of structured financing arrangements enables companies to diversify their lender base, increase their borrowing capacity, and even lower their financing costs. Securitization techniques may also be used to capture other benefits such as tailoring the financing to desired credit ratings, reducing lenders' regulatory capital charges or achieving particular treatments for tax or accounting purposes.

Asset-based lending in general, and securitization in particular, provides corporate borrowers with borrowing capacity against assets that, from a pure cash-flow-based lending perspective, may have limited to no borrowing value. Securitizations also have the potential for achieving a better regulatory treatment and a higher rating differential compared to the corporate credit rating, compared to