A segregated issuer is a special purpose vehicle (SPV) that is used in securitisations to isolate the assets and liabilities of the securitisation from the assets and liabilities of the originator. This helps to protect investors in the event of a default by the originator.
Here are some applications of a segregated issuer in securitisation:
- To isolate assets and liabilities: The segregated issuer isolates the assets and liabilities of the securitisation from the assets and liabilities of the originator. This means that if the originator defaults on its obligations, the assets and liabilities of the securitisation will not be affected.
- To protect investors: The segregated issuer helps to protect investors in the event of a default by the originator. This is because the investors only have a claim on the assets of the securitisation, and not on the assets of the originator.
- To reduce risk: The segregated issuer can help to reduce the risk of default by the originator. This is because the originator is not able to access the assets of the securitisation, which means that it is less likely to default on its obligations.
Here are some additional points to consider about a segregated issuer in securitisation:
- The segregated issuer is typically a trust or company that is specifically created for the securitisation.
- The assets of the securitisation are held by the segregated issuer on trust for the investors.
- The liabilities of the securitisation are limited to the assets of the securitisation.