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In a little over a decade, asset securitization has come of age in terms of investor acceptance, its position as a cost-effective financing alternative and its role as a staple of large underwriting houses. The enormous public asset-backed securities market is dominated by 2 asset classes: credit ca...

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Bibliographic Details
Published inFinancial executive (1987) Vol. 12; no. 2; pp. 43 - 46
Main Authors Arora, Rahul, Leszczynski, Andrew
Format Magazine Article
LanguageEnglish
Published Morristown Financial Executives International 01.03.1996
Subjects
Asset backed securities
Balance sheets
Bankruptcy
Bond markets
Cash flow
Collateral
Competition
Corporate debt
Credit risk
Delinquency
Finance companies
Loans
Management
Private placement
Receivables
Securities markets
Securitization
Security interests
Trends
United States > US
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Summary:In a little over a decade, asset securitization has come of age in terms of investor acceptance, its position as a cost-effective financing alternative and its role as a staple of large underwriting houses. The enormous public asset-backed securities market is dominated by 2 asset classes: credit card receivables and auto loans. Within each of these asset classes, asset-backed deals have become so commonplace that they resemble one another structurally. The smaller, private asset-backed securities market receives less media attention, but it is actually more dynamic than the public market. Now, companies with virtually any type of receivable can be sold off a firm's balance sheet and securitized. Northwest Airlines used ticket receivables for asset-backed securities; Pacific Lumber used trees. In 1995, public issuance of asset-backed securities reached approximately $110 billion, an industry record and nearly a tenfold increase over 1985, when just 7 asset-backed security transactions were completed at an approximate value of $1.4 billion. The seller's market, reasons for issuing, and hidden costs associated with issuing are also discussed.
ISSN:0895-4186