The Capital Markets Process of Securitisation

Essay by lucydronUniversity, Bachelor'sA-, July 2005

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Table of Contents

Executive summary


Letter of transmittal


Development and growth of securitisation 5

Securitisation Structure


Securitisation and the Capital Market


Securitisation and the Capital Market


Future Direction and Growth of Securitisation in the Capital Markets






References 18

Executive Summary

This report outlines the introduction and development of securitisation, looking at its origins in the American markets and its introduction and subsequent growth in the Australian market. The high levels of growth lie in the deregulation of the banking industry which has lead to the emergence of more sophisticated financial instruments, including the increased usage of securitisation as a process of selling off non-marketable assets to generate funds and manage the structure of the balance sheet. The growth in securitisation has impacted on both the global capital markets and the housing markets. Its growth created borrowing opportunities for companies that would have otherwise found it difficult access large amounts of funding.

It has also helped to reduce the cost of funds for financial institutions, and assisted in developing a more competitive housing loan market, with non ADI's, and increasingly regional banks are using securitisation as a means of increasing their funding capacity. Yet the securitisation market is ever evolving, with the introduction of Basel II in 2007 impacting of the future level of securitisation. Furthermore as financial instruments become more sophisticated it is expected that the types of assets being securitised will also evolve.

Letter of Transmittal

TO: Ms Julie Marget

FROM: Lucy Dron

DATE: 9 September 2004

SUBJECT: The capital markets process of securitisation

Here is the business report requested at the beginning of semester 2, detailing the development of capital markets in Australia and overseas.

The report explores the origins of securitisation its structure and its impact on...