The issuer is the entity that creates and issues the securitisation securities. The issuer is typically a special purpose vehicle (SPV) that is specifically created for the securitisation transaction.
The issuer is responsible for the following tasks:
- Acquiring the underlying assets: The issuer acquires the underlying assets that will be securitised. These assets can be a variety of different things, such as loans, receivables, or mortgages.
- Issuing the securitisation securities: The issuer issues the securitisation securities to investors. These securities represent ownership interests in the underlying assets.
- Managing the securitisation transaction: The issuer is responsible for managing the securitisation transaction. This includes collecting payments from the underlying assets, making payments to investors, and managing the risks of the securitisation.
Here are some of the applications of the issuer in securitisation:
- To transfer credit risk: The issuer transfers credit risk from the originator to the investors. This is because the investors are the ones who bear the risk of default on the underlying assets.
- To raise capital: The issuer raises capital by issuing the securitisation securities. This capital can be used by the originator to fund its business activities.
- To create liquidity: The issuer creates liquidity by issuing the securitisation securities. This is because the securities can be traded on secondary markets, which makes it easier for investors to buy and sell them.
The issuer is a key player in the securitisation process. It is responsible for creating and issuing the securitisation securities, managing the securitisation transaction, and transferring credit risk from the originator to the investors.