AFII Media

Securitization Asia

- A Journal in Structured Finance

Once a cause of the financial world’s problems, securitisation is now part of the solution.
- Securitisation: It’s back, the print edition of The Economist dated Jan 11th 2014

Securitisation theory seeks to explicate the processes through which:
(i) the security character of public problems is established;
(ii) the social commitments that accrue from the collective acceptance by a community that something is a menace,       are fixed; and
(iii) the possibility of a particular policy is created.

In this light, securitization is the conceptual apparatus that is well equipped to examine, in its broadest sense, the life cycle of a security issue.

Securitisation studies are currently informed, essentially, by two different theoretical perspectives. Firstly,the philosophical model which covers what is known under the name of the Copenhagen School though some scholars within that School have developed a distinctive take on securitisation. Secondly, the sociological model of securitisation brings together scholars of various walks of intellect from Belgium, Canada, France, UK, etc.

Security is the problem whose stakes are the highest for any human community and whose design and effects often involve the constitutive fabrics of the society (cultural, political, economic, ecological). That is, while securitisation theories interact with various theoretical frameworks, their conceptual core touches upon issues that underwrite the existence and life of a community (e.g., politics, agency, and legitimacy). In sum, the evolution of securitisation would depend on the extent to which it is able to engage other theories (head-on), not only in order to establish its added value, but in order to foster and hone its theoretical premises. Seen from this angle, the terrain to cover remains incredibly vast and potentially rich.

The present-day meaning of securitisation is a blend of two forces that are critical in today's world of finance - structured finance and capital markets. Securitisation leads to structured finance, as the resulting security is not a generic risk in entity that securitises its assets, but in specific assets or cash flows of such entity. In the case of simple financing, the risk is with the issuer, but now it is shifted to the asset or cash flows of such entity. The idea of securitisation is to create a capital market product that is, it results into creation of a ‘security’ which is a marketable product.

A look at the Global Securitisation Issuance (Euro Billions):

The Global Corporate Bond Issue (in Euro Billions):

(Source: AFME Securitisation Data Report, First Quarter 2015)

RBI's Deputy Governor, R. Gandhi at an event recently organised by the National Institute for Securities Market (NISM) said that, ‘In my opinion, our securitisation market is reviving up for a take-off’. Gandhi promised that RBI will do everything for the development of the market and listed out a host of factors which will drive it. The priority sector lending (PSL) obligations for banks will continue to help drive securitisation as banks can meet shortfall by picking up pools in securitisation transactions. Non-banking lenders and MFIs, whose strength lies in origination of loans through wider networks, will also continue to pool in their folios to raise resources from securitisation, he said.

Gandhi added that SEBI is examining the prospects of setting up trading and reporting platforms where securitisation transactions will be reported and a central data repository will be available to the securitisation market participants. The pension’s funds are not allowed to invest in such pools and insurance companies are restricted to invest only in high-rated papers, while adding that their respective regulators - IRDAI and PFRDA -- have been requested to look into their roles and regulations to facilitate long-term investment by insurance and pension funds in securitisation products.

The possible effects of securitisation on financial systems may differ fromcountry to country. The reason is differences in the structure of financial systems or because of differences in the way in which monetary policy is executed. The effects willalso vary depending upon the stage of development of securitisation in a particular country.

With this backdrop, AFII Corp is planning to launch ‘Securitization Asia – a Journal in Structured Finance’. Securitization Asiawould bean industry focused international journal devoted to analyse and provide practical guidance on structured finance instruments, techniques, and strategies. SAwould offer insightful news and comprehensive research on all aspects of structured finance, including Asset Backed Securities (ABS), Mortgage-Backed Security (MBS) and Collateralised Debt Obligations (CDOs).

SA will keep you on the cutting edge of topics such as credit derivatives and synthetic securitization, secondary trading in the CDO market, securitization in emerging markets and intellectual property, trends and developments in mortgage and home equity, credit card, auto loans and lease, student loans, and trade-receivables securitization, accounting, regulatory, and tax issues etc.

SA would benefit institutional Investors, issuers, trustees & servicers, rating agency analysts, accounting firms, underwriters/structurers, mortgage issuers/originators, law firms/lawyers/attorney, financial intermediaries, financial guarantors, commercial and investment bankers, regulators (involved in structured finance), developers/borrowers, credit enhancers, analytics firms, fixed income investors, commercial paper conduit operators, collateralized debt obligation issuers, ABS/MBS issuer, securitization professionals, commercial mortgage backed securities investors, bond underwriters, librarians and academics.