A short introduction to Asset Backed Securitization

1. Asset Backed Securitization
Presenters
Muhammad Imran Fayyaz
Junaid Ahmed

2. Agenda

3. Asset Backed Security
An Asset-backed security is a financial security whose
value and income payments are derived from and
collateralized by a specific pool of underlying assets.

4. Financial Security
A fungible, negotiable instrument representing financial value
and includes;

6. Structure of Asset-Backed Securities
High Credit rating Low rating Lowest or no
compared to Rating
Normally AAA Class A
Rating Usually retained
By issuer or
Low yield due to High Yield due to Sponsor
higher rating Lower rating
Highest return

7. Principal payment structures of ABS

8. Types of ABS according to principal payment method

9. Key Features of an Ideal Asset-Backed Instrument

10. ASSET_BACKED SECURITIZATION
PARTIES AND PROCESS

11. Parties in Securitization

12. Originator

13. Special Purpose Vehicle
A special purpose vehicle is a legal entity created to fulfill
a narrow or specific or temporary objects.

14. Characteristics of Special Purpose Vehicle (SPV)

15. Uses of SPV

16. Key features in a desired SPV

17. Misuse of SPV
Enron Scandal 2001
Tower Financial Scandal

18. Underwriter

19. Credit enhancers
• Over collateralization
• Subordination

20. Dealer

21. Benefits of Securitization

22. Sale of securitized
receivables
Credit enhancement Providing services
Fixed rate Coupon Notional Principle of
Payments Bonds

24. Short title and commencement

25. Definitions
Commission
Commission means securities and exchange
commission
Future receivable
Includes all such receivables against which
income may accrue at a future date

27. Investor
Investor is a person holding any asset backed
securities issued by special purpose vehicle
Offering document
Means document containing information on a
security calculated to invite offers

28. Ordinance
Ordinance means Companies Ordinance 1984
Originator
A person transferring Future receivables to
a Special Purpose Vehicle

29. Securitization
A process whereby a SPV issues TFCs or other
instruments to make payment to originator
and own the title of future receivables
Special Purpose Vehicle
Means a SPV registered by the commission for
the purpose of Securitization

30. Eligibility for Registration

31. Eligibility for Registration
No director, officer or employee of such person has been

32. Eligibility for Registration
Promoters, Directors and Trustees, in opinion of Commissioner are;

33. Registration

34. Cancellation of registration

35. Conditions of Operation
No SPV shall ;

36. Obligations of SPV

37. Advertisement and Invitation