True Sale: The Art of Saying “Mine. Not Yours” (Legally Speaking)

You’ve got a healthy book of loans – for example car loans - sitting on your balance sheet. They’re ticking along nicely, generating monthly repayments, but they’re also tying up capital and generally overstaying their welcome. You’d quite like to free up some funds, clean things up a bit, and maybe treat yourself to a modest yacht (or at the very least, a new Nespresso machine).

Up steps securitisation - the financial equivalent of spring cleaning your balance sheet. You bundle up those income-producing loans, package them neatly, and sell them off to a special purpose vehicle (SPV), which uses the proceeds from noteholders to pay you. Hey presto - fresh capital, a leaner balance sheet, and everything looking just a little bit tidier.