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ASF 2006 Securitization 101

ASF 2006 Securitization 101. Sunday, January 29, 2006 12:30 p.m. to 1:30 p.m. Speaker: Richard Simonds Partner, Thacher Proffitt & Wood LLP. What is Securitization?. Use a bankruptcy-remote SPE to isolate assets Issue structured securities based on cash flow from these assets.

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ASF 2006 Securitization 101

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  1. ASF 2006Securitization 101 Sunday, January 29, 2006 12:30 p.m. to 1:30 p.m. Speaker: Richard Simonds Partner, Thacher Proffitt & Wood LLP

  2. What is Securitization? • Use a bankruptcy-remote SPE to isolate assets • Issue structured securities based on cash flow from these assets

  3. What are Structured Securities? • Structured securities are non-recourse debt securities backed by financial assets such as mortgage loans and credit card receivables

  4. Kinds of Structured Securities • MBS: RMBS and CMBS • ABS • CDOs: mostly CBOs and CLOs • ABCP

  5. Basic Structures • Cash Flow Structures • Market Value Structures • Revolving and Non-Revolving

  6. Reasons for Securitization • Sell assets more efficiently off-balance sheet • Finance assets on- or off-balance sheet • In each case, assets are isolated from credit of the sponsor through a “true sale” of the assets

  7. Securitization Parties • Sponsor • Servicers • Trustee • Rating Agencies • Credit Support Providers

  8. Transaction Documents • Pooling and Servicing Agreement • Purchase Agreement • Officer’s Certificates • Opinions

  9. Legal Issues • True sale • Perfected security interest • Non-consolidation

  10. Accounting Issues • On-balance sheet treatment • Off-balance sheet treatment • FAS 140 and FIN 46

  11. Ratings • Evaluating risk and determining levels • Credit support structures

  12. Securities Offering Reform • Finalizing terms early Regulation AB • Enhanced disclosure requirements

  13. Conclusion • Bankruptcy remoteness • Diversification • Attractive securities for investors

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