In securitisation, a
debt security is a type of financial instrument that represents a loan made by an investor to a special purpose vehicle (
SPV). The SPV then uses the money raised from the sale of the debt securities to purchase a pool of underlying assets, such as
mortgages or loans. The investors in the debt securities receive a stream of payments from the SPV, which is based on the income generated by the underlying assets.
Debt securities in securitisations can be a bonzer investment for investors who are looking for a steady stream of income. However, it is important to remember that all debt securities carry some risk of
default. Investors should carefully consider the creditworthiness of the SPV and the underlying assets before investing in any debt security in a securitisation.