securitizations
Debt pool conversions
Securitizations are financial transactions that pool assets—mortgages, loans, credit card debt—and convert them into tradable securities sold to investors.
The process transforms illiquid assets into liquid investments: The bank's securitizations of subprime mortgages contributed to the 2008 financial crisis.
Securitization spreads risk but can obscure it, as buyers may not fully understand the underlying assets.
Portion of grouped securities
- poolingMerging shared contributions
- pass-throughTransferred without retention
- collateralizedBacked by pledged assets
- mortgage-backedBacked by home loans
asset-backed · waterfall · subordination · mezzanine · originator · servicer · trustee · strip
Outstanding amounts owed you
- mortgagesLoans secured by property
- subprimeUnder top credit tier
- primeReadying for action
- non-performingNot meeting obligations
collateral · portfolio · royalties · conforming · non-conforming · ABS · CDO
Preset standard option
- prepaymentPayment made beforehand
- extensionAdded part or duration
- contractionReduction in size
- delinquencyCriminal or neglectful behavior
correlation · systemic · contagion · counterparty · exposure · vintage · seasoning · concentration
Convertibility to cash
- pricingEstablishing monetary amounts charged
- valuationAssessment of monetary worth
- yieldProduce or relinquish
- spreadTo distribute widely
duration · convexity · discount · premium · coupon · amortization · principal · interest
Risk evaluation and acceptance
- prospectusFormal investment disclosure document
- offeringSomething presented or given
- placementPutting somewhere specific
- issuerOne who distributes officially
arranger · pricing · settlement · distribution · syndication · regulation · disclosure · S&P
tranche
Portion of grouped securities
- poolingMerging shared contributions
- pass-throughTransferred without retention
- collateralizedBacked by pledged assets
mortgage-backed · asset-backed · waterfall · subordination · mezzanine · originator · servicer · trustee · strip · carve-out
receivables
Outstanding amounts owed you
non-performing · collateral · portfolio · royalties · conforming · non-conforming · ABS · CDO
default
Preset standard option
- prepaymentPayment made beforehand
- extensionAdded part or duration
- contractionReduction in size
delinquency · correlation · systemic · contagion · counterparty · exposure · vintage · seasoning · concentration · mark-to-market
liquidity
Convertibility to cash
- pricingEstablishing monetary amounts charged
- valuationAssessment of monetary worth
- yieldProduce or relinquish
spread · duration · convexity · discount · premium · coupon · amortization · principal · interest · cash-flow
underwriting
Risk evaluation and acceptance
- prospectusFormal investment disclosure document
- offeringSomething presented or given
- placementPutting somewhere specific
issuer · arranger · pricing · settlement · distribution · syndication · regulation · disclosure · S&P · Fitch