Asset backed securities in china

... ASSET-BACKED SECURITIES IN CHINA Chapter-1 Introduction Securitisation, in its most basic form, is the repackaging of asset cash flows into securities. It means legally isolating sources of cash flow from avoidable risk, and issuing debt backed by this revenue. Securitisation is a pooling of "homogeneous", "financial", "cash flow producing", "illiquid"assets and issuing claims on those assets in the form of marketable securities. The higher yield associated with these securities attracts investors who are willing to bear incremental credit, prepayment and liquidity risk. The fundamental principle in securitisation is specific identification of risks and allocation of the same to various parties who are best able to manage those risks. Securitisation is the process by which, financial assets such as household mortgages, credit card balances, hire-purchase debtors and trade debtors, etc., are transformed into securities. In present day capital market usage, the term is implied to include securities created out of a pool of assets

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