Jay Gavigan and Leonela Vaccaro Padrón will co-present "Structured Finance and Securitization: A Discussion of Structuring Techniques" on November 7, 2023 for a CLE-accredited Strafford webinar.
This CLE webinar will provide an overview of key structured finance techniques used in both financing securitizations (often for accounts receivable financings and financings of similar assets) and capital markets securitizations such as CMBS, RMBS, CLOs, and CDOs. The panel will provide an overview of relevant types of transactions, including benefits and objectives of each, discuss asset types common to securitization, and compare them with alternate methods of financing.
Securitization is a subset of structured finance that allows creditors to monetize certain assets by transferring them to a bankruptcy remote special-purpose vehicle, or SPV, which in turn either borrows from traditional lenders or issues securities backed by those assets. Securitization transactions may be structured to retain both the assets and the indebtedness or to achieve balance sheet relief. Financing costs, including discounts, interest, and fees, also affect structuring decisions as well as industry and operational-specific considerations.
Securitization allows a company to monetize a pool of its assets by isolating the assets from the bankruptcy estate of the company originating them. The company assigns the selected assets to a bankruptcy remote "special-purpose entity," which then obtains financing that is secured by the selected assets.
The main parties to a securitization transaction include the originator/sponsor, the servicer, the trustee/collateral agent, the issuer or borrower, the underwriter or administrative agent, and the investors or lender. The main legal documents are the assignment agreement, indenture or credit agreement, and, if the debt is in the form of securities, the offering document. The indenture or credit agreement, as applicable, outlines the terms of the indebtedness incurred by the SPV and the rights and duties of the parties involved in the transaction.
Listen as our authoritative panel discusses securitization structures and the common issues that arise in these transactions.
Outline
- Securitization overview
- Comparison of securitization with other financing techniques
- Summary of securitization features and common types of asset pools
- Objectives of securitization
- Isolating assets from bankruptcy
- Lower-cost financing
- Access to broader funding sources at more favorable rates
- Parties to the transaction
- Originator/sponsor
- Servicer
- Trustee/collateral agent
- Issuer/borrower
- Underwriter/lenders
- Investors/lenders
- Legal documents
- Indenture/credit agreement
- Offering document (if debt is in form of securities vs. loan)
- Benefits/drawbacks of securitization over other structured finance products (e.g., factoring)
- Key takeaways and practical considerations
Benefits
The panel will review these and other key issues:
- What is securitization and how does it work?
- How does a securitization compare with other types of financing techniques (e.g., factoring, asset-backed financing, warehouse/repo transactions)?
- What are the asset types common to securitization?
- What are the benefits of securitization?
- What are the key considerations for the various parties involved in these types of transactions?