A static pool is a pool of assets that is not expected to change over time. This means that the assets in the pool will not be added to or subtracted from after the securitisation is completed.
Static pools are often used in securitisations of assets that have a predictable cash flow, such as mortgages or credit card receivables. This is because the predictable cash flow from the assets helps to reduce the risk of the securitisation.
Here are some of the applications of static pools in securitisation:
- To reduce risk: Static pools can help to reduce the risk of a securitisation by providing a predictable cash flow from the assets.
- To simplify the securitisation process: Static pools can simplify the securitisation process by making it easier to track the assets and calculate the payments to investors.
- To reduce costs: Static pools can reduce the costs of a securitisation by reducing the need to manage the pool of assets after the securitisation is completed.
Here are some examples of static pools in securitisation:
- Mortgage-backed securities (MBS): MBS are a type of securitisation where the underlying assets are mortgages. MBS are often structured as static pools, as the mortgages in the pool are not expected to change over time.
- Credit card receivables-backed securities (RMBS): RMBS are a type of securitisation where the underlying assets are credit card receivables. RMBS are often structured as static pools, as the credit card receivables in the pool are not expected to change over time.