A borrower is a person or entity that takes out a loan that is then securitised. The borrower is responsible for repaying the loan, with interest, to the securitisation vehicle.
The borrower's creditworthiness is one of the most important factors that determines the value of the securities that are created when a securitisation is executed. If the borrower is likely to default on the loan, the securities will be worth less.
Here are some examples of borrowers in Australia that have been involved in securitisation:
- Individuals who have taken out mortgages
- Businesses that have taken out loans to finance their operations
- Governments that have taken out loans to finance infrastructure projects
Borrowers play an important role in the securitisation market. They provide the loans that are securitised, and their creditworthiness determines the value of the securities that are created.