Asset Securitization and Structured Receivables: Creating Value in the Sale of Assets

In asset-liability management decision making, evaluating alternatives for the sale or pledge of assets has become critical as a result of interest rate volatility and supply-demand imbalances for loan products. In considering either collateralized borrowing or a sale of substantial assets, manageme...

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Bibliographic Details
Published in:Financial managers' statement 1989-07, Vol.11 (4), p.26
Main Authors: Safrit, Nancy J, Cole, Charles W
Format: Article
Language:English
Subjects:
Asset management
Bank assets
Bank liabilities
Financial institutions
Market value
Mortgage backed securities
Receivables
REMICs
Securitization
Structured
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Summary:In asset-liability management decision making, evaluating alternatives for the sale or pledge of assets has become critical as a result of interest rate volatility and supply-demand imbalances for loan products. In considering either collateralized borrowing or a sale of substantial assets, management must review the institution's total portfolio, evaluating areas that are performing well, that are being well utilized, and that are attractive to hold long term. Structured receivables backed by consumer or mortgage loans can create value for investors and issuers in a market where whole loan sales are stagnant. A significant decline in the price of any type of consumer or mortgage loan is typically caused by either an imbalance in supply-demand forces or by a fear of the credit, yield, or prepayment risk associated with the assets. In this type of market, various financing structures can be designed to alleviate any or all of these investor risks for substantial portions of the portfolio.
ISSN:0887-4808