True Sale Securitisation - Asset Backed
A true sale transaction is the traditional form of a securitisation to which the Company is conducting for debt finance. The Securitisation Vehicle (‘SV”), CIC Fund Securitisation S.A. acting exclusively in the name and on behalf of one of its segregated compartments for a Client, acquires the intangible asset from the Client (“originator”) who transfers the intangible assets to the SV Client compartment. The assets are then removed from the balance sheet of the Client and added to the balance sheet of the SV, on a compartment basis. The SV acting exclusively in the name and on behalf of segregated Client compartment provides debt notes (working capital) against the valuation of the intangible assets. Once the debt note plus interest is repaid by the Clients, the intangible assets are returned.
Securitisation Transaction 1
Securitisation Transaction 2
In synthetic securitisation the Client has secured working capital and is seeking to use an SV compartment that provides investor (subscribers of the Client) protection through a series of credit derivatives instead of selling the asset pool to the SV.
They are typically undertaken to transfer credit risk and reduce regulatory capital requirements. The credit derivatives are normally convertible to equity in the Client say in a period of five years. This also protects the Client existing shareholders from issuing equity for working capital especially if the Client expects their value to significantly increase over time.