Securitisation Benefits for Investors and Originators

The main benefits of the Securitisation for originators/issuers

1. A structure providing efficient access to capital markets:
   Possibility of high rating for most tranches of notes issued
   Positive and significant impact on borrowing costs for cash flows securitisation
2. Issuer specific limitations on ability to raise capital are reduced:
   Entities unable to raise capital due to their specific circumstances (terms, credit quality, prepayment assumptions, etc) are able to raise capital under the securitisation
3. Possibility to create liquidity:
   Assets that are not readily sellable may be combined to create a diversified collateral pool funded by notes issued by a securitisation vehicle.
4. Ability to diverse and target different investor base, funding sources and transaction structures:
   It can reach new markets and investors groups
   There might be potential debt costs reduction and specific issuer risks exposure reduction
   It also enables originators to raise capital in order to generate extra assets
5. Possibility of raising capital without prospectus-type disclosure:
   Confidentiality is strengthened regarding sensitive information, this is specifically the case in regards to conduit or private placement
6. It enables the generation of earnings:
   During a true-sale securitisation, the transaction will be reflected on the balanced sheet of the originators, hence generally resulting in improvement in terms of earnings.
7. Merger & acquisition completion and efficient divestitures
   Possibility to be complementary to M&A activities by providing a source of capital
   Optimisation of business closure due to assets segmentation/sale
8. Third parties risk transfer
   Potential to partially or fully transfer the associated sale transaction or risks to investors and credit enhancers
9. Capital requirements are lowered for banks and insurance companies:
   The removal of the assets within a company’s balance sheet lowered the requirements of related capital, resulting in the capital being available for other purposes

How to use securitisation to raise capital

Many promoters or entrepreneurs are using the securitization SPV to attract and raised capital without giving away some of their portion of equity.

The process is quite simple and straight forward, a Securitisation Vehicle (SPV) will be set up by the promoter and the SPV would issue Notes (bonds/certificates) to Investors. The proceed of the Notes is then used either to acquire an asset or to grant a loan in the form of a facility agreement to finance an operational Company, a business, an acquisition, a deal or any type of assets.

The loan will generate an interest payable by the operation Company to the SPV which will in turn pay a yield to the investors on the Notes.

The interests due to the SPV on the loan may be fixed, variable or fully profit participating (for instance a portion of the profits generated by the Company and likewise the yield payable to the investor may be a fixed coupon or a variable with a profit participation every year or at the end of the project.

The SV serves as a pass-through entity. The Notes may be listed, rated and may receive an Isin number for clearing.

Creatrust provides various solutions to issue such Notes and other instruments for the acquisition or financing of any kind of businesses, small and medium-sized enterprises to the more established companies looking to attract external capital for specific projects.

Thanks to the flexible framework of the securitisation law such capital raising can start from as low as EUR 1 million and with lead times of a couple of weeks only.