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    Asset Securitization

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    In what way can asset securitization reduce the cost of funds for an issuer?

    Could you please explain in details? Also, can you provide some example?

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    Securitization is the process of transforming illiquid assets into a security, i.e. an instrument that is issued and can be traded in a capital market. Assets that have been transformed in this manner include residential mortgages, auto loans, credit card receivables, leases and utility payments. Securities involving housing mortgages are referred to as mortgage-backed securities (MBS). The term asset-backed security (ABS) is generally applied to any securitized instrument other than MBS. Asset securitization techniques were pioneered in the U.S.A and are being embraced by a number of Asian countries seeking to promote home ownership, finance infrastructure growth, and develop their domestic capital markets.

    In case of a typical Asset Securitization financial claims ...

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