Väärtpaberistamise

Väärtpaberistamine refers to the financial process of pooling various types of contractual debt, such as mortgages, auto loans, or credit card debt, and selling them as investments to capital markets. Essentially, it involves transforming illiquid assets into liquid securities. The originating entity, often a bank or lender, sells these assets to a special purpose vehicle (SPV) or trust. This SPV then issues securities, backed by the cash flows from the underlying assets, to investors. These securities are typically structured into different tranches, each with varying levels of risk and return. Investors receive payments from the cash flows generated by the pooled assets, such as principal and interest payments from the original loans. This process allows lenders to free up capital, enabling them to originate more loans, and provides investors with opportunities to diversify their portfolios. The market for securitized products is diverse and can include residential and commercial mortgages, auto loans, student loans, credit card receivables, and even future revenue streams. However, väärtpaberistamine also carries inherent risks, including credit risk if the underlying borrowers default, and market risk if interest rates change significantly.