IBBM - Institute of Bankers Malaysia  Workshop

Financing with Asset-Backed Securities
Prof. Ian Giddy

New York University

What is Asset Securitization?
Asset-backed securities are securities which are based on pools of underlying assets. These assets are usually illiquid and private in nature. A securitization occurs to make these assets available for investment to a much broader range of investors. The "pooling" of assets makes the securitization large enough to be economical and to diversify the qualities of the underlying assets. A special purpose trust or instrument is set up which takes title to the assets and the cash flows are "passed through" to the investors in the form of an asset-backed security. The types of assets that can be "securitized" range from residential mortgages to trade receivables and even music royalties. The asset-backed security usually qualifies for a top rating and enables the issuing company or bank to raise funds at a very attractive rate, while freeing up capital and retaining customer relatiuonships and servicing revenues. For more details see the instructor's website, asiansecuritization.com

Who Should Attend?
The seminar is of relevance to both potential originators and investors in asset-backed securities: bank officers; investment bankers, securities analysts; investment officers; corporate treasurers and other individuals whose professional future may be enhanced by an understanding of the asset securitization technique.


Participants will be provided with a package of materials useful to the structuring and analysis of asset-backed deals, including pertinent articles, rating agency reports and sample documentation from actual deals done in Asia and elsewhere.

Ian Giddy has taught finance at NYU, Columbia, Wharton, Chicago and in 30+ countries abroad for the past two decades. He was Director of International Fixed Income Research at Drexel Burnham Lambert from 1986 to 1989. The author of more than fifty articles on international finance, he has served at the International Monetary Fund and the U.S. Treasury and has been a consultant with numerous corporations and financial institutions in the U.S. and abroad. As a banker and consultant he has been involved in the growth of the ABS market in the USA, Europe and Asia. He is the author or co-author of The International Money Market, The Handbook of International Finance, Cases in International Finance, Global Financial Markets, Asset Securitization in Asia and The Hudson River Watertrail Guide.

Prof Ian Giddy
Stern School of Business
New York University
44 West 4th Street
New York, NY 10024


  The Workshop
Asset-backed securities constitute a growing segment of the Asian and global capital markets. In recent years the ABS market has enabled companies and banks to finance a wide range of assets in the public debt market and has attracted a variety of fixed-income investors. The asset securitization techniques, while complex, has won a secure place in corporate financing and investment portfolios because it can, paradoxically, offer originators a cheaper source of funding and investors a superior return. Not only does securitization transform illiquid assets into tradeable securities, but it also manages to transform risk by means of the separation of good financial assets from a company or financial institution with little loss of revenue. The assets, once separated from the originator, are employed as backing for high-quality securities designed to appeal to investors. 

This seminar asks why and when corporations and financial institutions should issue asset-backed securities, and which kind of such instruments make sense to investors. In two information-packed days of instruction and application, we hope to offer an economic cost-benefit analysis of the technique, an insight into the legal, accounting, tax and regulatory principles, the risks and how they can be managed, and a roadmap for choosing this technique over others in today's capital market. 

The workshop will include case studies of actual deals, as well as hands-on exercises, and will give participants the opportunity to demonstrate their understanding of deals through presentations and discussions. 

Outline of Workshop
Day 1
  • The ABS Market
  • The Securitization Process
  • Legal, Tax, Accounting and Disclosure Aspects of ABS
  • Focus: The Mortgage-Backed Securities Market
Day 2 
  • Risk Assessment and Credit Enhancement
  • The Rating Process
  • Focus: CLOs and CBOs
Day 3
  • Cost-Benefit Analysis
  • Structuring and Pricing Asset-Backed Securities: Case Studies in Different Countries and with Different Assets
  • Focus: Asset-Backed Commercial Paper
Day 4
  • Future-Flow Securitization ans Securitization of Intangibles
  • Focus:  and Project Finance
  • Hands-on Exercises: New Applications of the ABS Techniques

Contents of Workshop

    Day 1 

    The Asset-Backed Securities Market Today
    • Asset securitization defined
    • Different forms of ABS and applications in Asia
    • The advantages & disadvantages of asset securitisation as a financing technique
    • Growth and changing character of the market – Asia, Europe and North America
    • Asiansecuritization.com and other sources of information about ABS
    • Illustration: Dayton Hudson deal
    The Securitization Process
    • Before the deal: suitability of assets, originator/servicer, investors
    • The process: Example of typical structure and cash flows
    • Forms of credit enhancement
    • Case study: Finance Company Bhd
    Legal, Tax, Accounting and Bank Regulatory Aspects of ABS
    • Legal prerequisites: bankruptcy remote, no or limited recourse to sponsor
    • Accounting prerequisites: sale for accounting purposes, FAS 140
    • Tax prerequisites: treatment of assets and of the debt for interest deductability, treatment of income at the SPV level
    • Bank regulation, capital requirements and Basle II
    • Alternative structures employed
    • Case study: Ford Auto Loan Backed Securities
    • Case study: Haus MBS
    Focus: The Mortgage-Backed Securities Market
    • Home and commercial mortgage securitization
    • US case study: Fannie Mae
    • Asian case study: Harbour City

    Day 2 

    Risk Assessment and Credit Enhancement
    • Sources of risk
      • Pool default risk
      • Seller/originator risk
      • Servicer performance risk
      • Swap counterparty risk
      • Legal risks
      • Sovereign risk
    • Case study: The DBS Bank Singa Deal
    • Non-credit risks, such as prepayment and market risk
    • Techniques of risk reduction
      • Credit risk management
      • Overcollateralization and excess servicing
      • Senior-subordinated structures
      • Financial guarantees
    • Financial guarantors
    • Case Study: Atherton Franchise Loan Securitization
    The Rating Process
    • The rating agencies, rating levels and what they mean
    • Pool analysis
    • Originator, servicer, counterparty and manager analysis
    • Legal structure analysis
    • Deal analysis and negotiating credit enhancement
    • Application: CDO Model and Application
    • Ongoing monitoring, reporting and re-rating
    • Case study: Belenus
    Focus on CLOs and CBOs
    • Use of collateralized loan obligations by banks
    • Cash flow vs market value structures
    • Participation vs assignment of assets
    • Synthetic structures
    • Case study: Global High Yield Bond Trust
    • Case study: Korea Asset Funding 2000-1

    Day 3 

    Cost-Benefit Analysis

    • Securitization in the context of corporate financing choices
    • The economics of off-balance-sheet financing
    • Financial cost-benefit analysis for corporate originators
    • Financial cost-benefit analysis for financial institutions
    • Servicer profitability analysis
    • Why and when should we finance with asset-backed securities? Some guidelines
    • Who should invest in asset-backed securities?
    • Case study: Ford Auto Loan Backed Securities
    Structuring and Pricing Asset-Backed Securities: Case Studies in Different Countries and with Different Assets
    • Auto loan securitization
    • Credit card securitization
    • Dealing with the sovereign and currency risk issues in Asian securitization
    • Case study: Thai Cars
    • Use of interest rate and currency swaps
    • Case study: Hong Kong Credit Card Trust
    Focus: Asset-backed Commercial Paper
    • Financing trade receivables: US, Europe and Asia
    • Special features of ABCP
    • Case study: CAST, Bavaria

    Day 4

    Applications in Future-Flow Securitisation and Securitisation of  Intangibles
    • Future-flow securitisation: explanation and applications
    • Securitisation of intangibles: explanation and applications
    • Case studies: Oil Trading Co., FILMS, Bowie Bonds
    Focus: Asset-Backed Project Financing
    • Project finance defined
    • Non-recourse structure
    • Roles of sponsor and other participants
    • Sources of funding
    • In-depth case study: Ras Laffan LNG
    Hands-on Exercises: Evaluating Asset-Backed Securities  
    • Bad loan securitisation  
    • Commercial property securitisation  
    • Equipment lease securitisation  
    • Consumer credit securitisation

    Recap of the Seminar

Pre-Workshop Readings 

Participants will benefit from reading some or all of the following, in order of importance, before the workshop.

The Market Useful Articles Case Studies and Deals Workshop Slides Useful Websites

Other resources on asset-backed securities: 
Mortgage-Backed Securities:

Seminars conducted by Ian GiddyPowerpoint presentation documents
ArticlesCase studies
SpreadsheetsInternet links

Related websites:



Go to Giddy's Web Portal • Contact Ian Giddy at ian.giddy@giddyonline.com
last updated 10 Dec 2005 jog