Corporate securitisation
3 Document title Additional text
What are the benefits of securitisation?
Acceleration of cash flow/working
capital boost
Lower cost of debt
Higher leverageFunding
diversity/access to capital distinct
from corporate lending/bond
market
Potential to move funding
off-balance sheet
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What is corporate securitisation?A secured financing whereby investors lend directly against a pool of financial assets, such as receivables, sold by you to an orphan special purpose vehicle, with no recourse to yourself as the originator/seller.
Senior lenders are protected by a credit buffer (overcollateralisation) funded by you and, if desired, junior investors.
Do you need support?Securitisations are particularly complex transactions.
Compared to other financings, it is more difficult for companies to understand where value is shifting to lenders throughout term sheet negotiation and transaction execution.
The total funding package matters much more than just a proposed credit spread and initial estimate of the advance rate. There are dozens of decisions that will be made along the route to financial close, on asset eligibility requirements, concentration limits, trigger events, data requirements, cash management requirements, reporting requirements, hedging proposals, performance guarantees, funding calculations and a host of other issues.
How you resolve these issues will have a material impact on your business and on the funding outcome, including net costs and net leverage.
Is securitisation right for you?Before deciding to launch a transaction, you may have important questions that need answering:
What are the true costs of securitisation?
What are the risks?
How can I get the best value from potential lenders?
How does it compare to your other funding options?
How would the securitisation work?
How long would it take?
What are the data and operational requirements?
How would it impact my business?
Am I ready to securitise now or should I wait?
How we can helpAcross structured finance markets EY offers the full range of financial advisory and support services through the transaction life cycle.
We act as an independent debt advisor to sponsors from the initial assessment phase of a securitisation right through to financial close.
We help clients put in place or refinance structured funding that balances competing objectives of leverage, pricing and flexibility.
Director Capital and Debt Advisory+ 44 20 7951 6395 [email protected]
Contact:Anton Krawchenko
You can also find out more at ey.com/uk/cda
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