- resources in finance

The International Investor

Securitization & Credit Risk Transfer
Prof Ian Giddy
Stern School of Business, New York University

What the Session is About

Asset-backed securities constitute a growing and complex segment of the global capital markets. The technique is becoming widely employed in developing as well as developed countries.

The workshop provides an insight into the state of the art in securitization and structured credit risk transfer, with an emphasis on consumer finance and automobile leasing. In addition to covering the technique of asset-backed securities in emerging markets, we look at synthetic asset securitization, a versatile and fast-growing technique in the ABS market. It opens new possibilities for receivables funding and the management of credit risk.

Issues Open for Discussion

  • Where is the global asset-backed securities market headed?
  • How is a securitization deal structured?
  • What are the key legal and regulatory issues in the asset-backed market today, and how are they addressed in different forms of ABS?
  • What is special about consumer credit securitization?
  • What is "future flow securitization"? What risk transfer choices do emerging market banks have?

Asset-Backed Securities Today
  • The state of the market
  • Getting an ABS deal to market
  • Credit enhancement
  • Cash flow analysis and pricing
  • Example: Finance Company Berhad. We review the process, structure and cash flows of this Malaysian deal
  • Key legal prerequisites of ABS today
  • Illustration: Hyundai Auto Loan Securitization
  • Tiering the funding structure
  • Future-flow securitization
  • Example: Pakistan Telecommunications: Securetel SPV. 
  • Securitization as a local-currency asset-liability management tool.
  • Illustration: Microfinance Securitization in Bangladesh

Risk Transfer: Beyond Asset-Backed Securities

  • The growing importance of collateralized collateralized loan obligations (CLOs) and credit derivatives
  • CLO credit enhancement and ratings
  • Alternative risk transfer methods via synthetic ABS
  • Example: Red & Black. A French synthetic consumer credit securitization.
  • Conclusion: risk transfer choices for banks in emerging markets

Case studies
Finance Co. Bhd
Hyundai Auto ABS
BRAC Microfinance ABS
Red & Black

Introduction to ABS
Rating Consumer Credit ABS
Auto Lease ABS

About the Instructor
Ian Giddy is on the faculty of finance at New York University, USA. He has taught finance at NYU, Columbia, Wharton, Chicago and abroad for the past thirty years. 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, Dr Giddy has served at the International Monetary Fund and the U.S. Treasury and has been a consultant with numerous financial institutions and corporations in Europe, North America, the Middle East and Asia. He has lectured in more than forty countries, and has been involved in the asset-backed securities market for over 15 years. 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. He and his wife are the founders of Cloudbridge, a nature reserve in Costa Rica. | | | | contact
Copyright ©2006 Ian Giddy. All rights reserved.