A seller is a party that sells assets to a special purpose vehicle (SPV) in a securitisation transaction. The seller is typically a financial institution, such as a bank or credit union, that originates loans.
Here are some applications of a seller in securitisation:
- To sell assets: The seller sells assets to the SPV in return for cash. This allows the seller to free up capital and focus on its core business.
- To reduce risk: The seller can reduce its risk by selling assets to the SPV. This is because the SPV is responsible for managing the assets and collecting payments from the borrowers.
- To increase liquidity: The seller can increase the liquidity of its assets by selling them to the SPV. This is because the SPV can then issue securities backed by the assets, which can be more easily traded than the underlying assets.
Overall, a seller is an important part of the securitisation process. It sells assets to the SPV, which allows the SPV to issue securities backed by the assets. This can help the seller to free up capital, reduce risk, and increase liquidity.