FEATURES OF ASSETS TO BE SECURITISED :
The assets to be securitized shall have the following features:
(a) The cash flows generated from the assets should be received periodically in accordance with a pre¬determined schedule.
(b) The actual cash flows generated from the assets should be predictable.
(c) The assets should be large in number and total value to be issued in securitized form
(d) The assets should be sufficiently similar in nature to enable pooling of their cash flows.
(e) The assets should be marketable.
Advantages of Asset backed Securities to Issuer
(a) The issuer can generate cash from the assets immediately enabling funds to be redeployed in other projects.
(b) The issuer may be able to improve balance sheet ratios by excluding the original assets and the securities created by the assets from the balance sheet by suitable structuring of the transaction.
Advantages of Asset backed Securities to Investor
These instruments have a relatively low credit risk since the securities are backed by good quality collateral and
offer a higher yield than Government securities.