{"product_id":"introduction-to-securitization-isbn-9780470371909","title":"Introduction to Securitization","description":"\u003ci\u003eIntroduction to Securitization\u003c\/i\u003e outlines the basics of securitization, addressing applications for this technology to mortgages, collateralized debt obligations, future flows, credit cards, and auto loans. The authors present a comprehensive overview of the topic based on the experience they have gathered through years of interaction with practitioners and graduate students around the world. The authors offer coverage of such key topics as: structuring agency MBS deals and nonagency deals, credit enhancements and sizing, using interest rate derivatives in securitization transactions, asset classes securitized, operational risk factors, implications for financial markets, and applying securitization technology to CDOs. Finally, in the appendices, the authors provide an essential introduction to credit derivatives, an explanation of the methodology for the valuation of MBS\/ABS, and the estimation of interest rate risk.  \u003cp\u003eSecuritization is a financial technique that pools assets together and, in effect, turns them into a tradable security. The end result of a securitization transaction is that a corporation can obtain proceeds by selling assets and not borrowing funds. In real life, many securitization structures are quite complex and enigmatic for practitioners, investors, and finance students. Typically, books detailing this topic are either too lengthy, too technical, or too superficial in their presentation. Introduction to Securitization is the first to offer essential information on this topic at a fundamental, yet comprehensive level-providing readers with a working understanding of what has become one of today's most important areas of finance.\u003c\/p\u003e \u003cp\u003eAuthors Frank Fabozzi and Vinod Kothari, internationally recognized experts in the field, clearly define securitization, contrast it with corporate finance, and explain its advantages. They carefully illustrate the structuring of asset-backed securities (ABS) transactions, including agency mortgage-backed securities (MBS) deals and nonagency deals, and show the use of credit enhancements and interest rate derivatives in such transactions. They review the collateral classes in ABS, such as retail loans, credit cards, and future flows, and discuss ongoing funding vehicles such as asset-backed commercial paper conduits and other structured vehicles. And they explain the different types of collateralized debt obligations (CDOs) and structured credit, detailing their structuring and analysis. To complement the discussion, an introduction to credit derivatives is also provided.\u003c\/p\u003e \u003cp\u003eThe authors conclude with a close look at securitization's impact on the financial markets and the economy, with a review of the now well-documented problems of the securitization of one asset class: subprime mortgages. While questions about the contribution of securitization have been tainted by the subprime mortgage crisis, it remains an important process for corporations, municipalities, and government entities seeking funding. The significance of this financial innovation is that it has been an important form of raising capital for corporations and government entities throughout the world, as well as a vehicle for risk management. Introduction to Securitization offers practitioners and students a simple and comprehensive entry into the interesting world of securitization and structured credit.\u003c\/p\u003e \u003cp\u003ePreface xiii\u003c\/p\u003e \u003cp\u003eAbout the Authors xvii\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart One Background 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Introduction 3\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Is a Securitization? 5\u003c\/p\u003e \u003cp\u003eIllustration of a Securitization 8\u003c\/p\u003e \u003cp\u003eSecurities Issued in a Securitization 10\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 11\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Issuer Motivation for Securitizing Assets and the Goals of Structuring 13\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eReasons Securitization Is Used for Funding 13\u003c\/p\u003e \u003cp\u003eStructuring Goals 21\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 24\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Two Structuring ABS Transactions 29\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Structuring Agency MBS Deals 31\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePrepayments and Prepayment Conventions 31\u003c\/p\u003e \u003cp\u003eSequential Pay Structures 38\u003c\/p\u003e \u003cp\u003ePlanned Amortization Class Bonds and Support Bonds 43\u003c\/p\u003e \u003cp\u003eTargeted Amortization Class Bonds 50\u003c\/p\u003e \u003cp\u003eAccrual Bonds and Accretion-Directed Bonds 50\u003c\/p\u003e \u003cp\u003eFloating Rate Bond Classes 55\u003c\/p\u003e \u003cp\u003eNotional Interest-Only Bond Classes 60\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 61\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Structuring Nonagency Deals 65\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIdentification of the Asset Pool 68\u003c\/p\u003e \u003cp\u003eSelection of the Assets 69\u003c\/p\u003e \u003cp\u003eIdentification of Risks 70\u003c\/p\u003e \u003cp\u003eDetermination of the Sources and Size of Credit Support 72\u003c\/p\u003e \u003cp\u003eDetermination of the Bond Classes 73\u003c\/p\u003e \u003cp\u003eTime Tranching of Bond Classes 75\u003c\/p\u003e \u003cp\u003eSelecting the Pay Down Structure for the Bond Classes 76\u003c\/p\u003e \u003cp\u003eDetermination of the Amount and Sources for Liquidity Support 77\u003c\/p\u003e \u003cp\u003eDetermining if Any Prepayment Protection Is Needed 78\u003c\/p\u003e \u003cp\u003eInclusion of Structural Protection Triggers 79\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 80\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Credit Enhancements 85\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCredit Enhancement Mechanisms 86\u003c\/p\u003e \u003cp\u003eSizing of Credit Enhancements 93\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 97\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Use of Interest Rate Derivatives in Securitization Transactions 101\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eInterest Rate Swaps 101\u003c\/p\u003e \u003cp\u003eCaps and Floors 115\u003c\/p\u003e \u003cp\u003eCounterparty Risk 118\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 120\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Operational Issues in Securitization 123\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Servicing Function 124\u003c\/p\u003e \u003cp\u003eTypes of Servicers 124\u003c\/p\u003e \u003cp\u003eServicer Strengths 125\u003c\/p\u003e \u003cp\u003eServicer Qualities 128\u003c\/p\u003e \u003cp\u003eServicing Transition 141\u003c\/p\u003e \u003cp\u003eBackup Servicer 142\u003c\/p\u003e \u003cp\u003eReporting by the Servicer 142\u003c\/p\u003e \u003cp\u003eRole of Trustees in Operation of the Transaction 143\u003c\/p\u003e \u003cp\u003eFraud Risk 144\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 145\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Three Review of ABS Collateral 147\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Collateral Classes in ABS: Retail Loans 149\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCollateral Classes: Basis of Classification 149\u003c\/p\u003e \u003cp\u003eCollateral Classes: Main Types 152\u003c\/p\u003e \u003cp\u003eCredit Card Receivables 153\u003c\/p\u003e \u003cp\u003eAuto Loan Securitization 161\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 165\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Asset-Backed Commercial Paper Conduits and Other Structured Vehicles 169\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTypes of ABCP Conduits 170\u003c\/p\u003e \u003cp\u003eTraditional Securitization and ABCP 173\u003c\/p\u003e \u003cp\u003eABCP Collateral 174\u003c\/p\u003e \u003cp\u003eCredit Enhancement Structure 174\u003c\/p\u003e \u003cp\u003eLiquidity Support 177\u003c\/p\u003e \u003cp\u003eParties to an ABCP Program 178\u003c\/p\u003e \u003cp\u003eRating of ABCP Conduits 180\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 182\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Securitization of Future Cash Flows: Future Revenues, Operating Revenues, and Insurance Profits 187\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eFuture Revenues Securitization 187\u003c\/p\u003e \u003cp\u003eWhole Business or Operating Revenues Securitization 195\u003c\/p\u003e \u003cp\u003eSecuritization of Insurance Profits 204\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 206\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Four Collateralized Debt Obligations 209\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Introduction to Collateralized Debt Obligations 211\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhy Study CDOs? 211\u003c\/p\u003e \u003cp\u003eTerminology: CDO, CBO, CLO 212\u003c\/p\u003e \u003cp\u003eTypes of CDOs 213\u003c\/p\u003e \u003cp\u003eTypical Structure of a CDO 217\u003c\/p\u003e \u003cp\u003eBasic Economic Drivers of CDOs 220\u003c\/p\u003e \u003cp\u003eCDO Market and the Health of Banking 224\u003c\/p\u003e \u003cp\u003eGrowth of the CDO Market 225\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 227\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Types of Collateralized Debt Obligations 229\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBalance Sheet CDOs 229\u003c\/p\u003e \u003cp\u003eArbitrage CDOs 243\u003c\/p\u003e \u003cp\u003eResecuritization or Structured Finance CDOs 249\u003c\/p\u003e \u003cp\u003eIndex Trades and Index Tracking CDOs 251\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 252\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Structuring and Analysis of CDOs 255\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMeasures of Pool Quality 255\u003c\/p\u003e \u003cp\u003eAsset and Income Coverage Tests 257\u003c\/p\u003e \u003cp\u003eRamp-Up Period 261\u003c\/p\u003e \u003cp\u003eThe CDO Manager 261\u003c\/p\u003e \u003cp\u003eInvesting in CDOs 265\u003c\/p\u003e \u003cp\u003eCollateral and Structural Risks in CDO Investing 266\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 270\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Five Implications for Financial Markets 273\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Benefits of Securitization to Financial Markets and Economies 275\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSecuritization and Funding Costs 277\u003c\/p\u003e \u003cp\u003eSecuritization and Financial Intermediation 281\u003c\/p\u003e \u003cp\u003eBenefits of Securitization in an Economy 284\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 288\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Concerns with Securitization’s Impact on Financial Markets and Economies 291\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eReduces the Effectives of Monetary Policy 291\u003c\/p\u003e \u003cp\u003eAdverse Impact on Banks 293\u003c\/p\u003e \u003cp\u003eLax Underwriting Standards and Poorly Designed Securities 294\u003c\/p\u003e \u003cp\u003eIncreases Opaqueness of Bank Risk 300\u003c\/p\u003e \u003cp\u003eKey Points of the Chapter 302\u003c\/p\u003e \u003cp\u003e\u003cb\u003eAppendix A  Basics of Credit Derivatives 305\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eElements of a Credit Derivative Transaction 306\u003c\/p\u003e \u003cp\u003eBilateral Deals and Capital Market Deals 310\u003c\/p\u003e \u003cp\u003eReference Asset or Portfolio 311\u003c\/p\u003e \u003cp\u003eStructured Portfolio Trade 312\u003c\/p\u003e \u003cp\u003eTypes of Credit Derivatives 321\u003c\/p\u003e \u003cp\u003e\u003cb\u003eAppendix B  Valuing Mortgage-Backed and Asset-Backed Securities 325\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCash Flow Yield Analysis 325\u003c\/p\u003e \u003cp\u003eZero-Volatility Spread 327\u003c\/p\u003e \u003cp\u003eValuation Using Monte Carlo Simulation and OAS Analysis 328\u003c\/p\u003e \u003cp\u003eMeasuring Interest Risk 339\u003c\/p\u003e \u003cp\u003eReferences 343\u003c\/p\u003e \u003cp\u003eIndex 349\u003c\/p\u003e  \u003cp\u003eFrank J. Fabozzi, PhD, CFA, CPA, is Professor in the Practice of Finance at Yale University's School of Management, Editor of the Journal of Portfolio Management, and Associate Editor of the Journal of Structured Finance and the Journal of Fixed Income.\u003c\/p\u003e \u003cp\u003eVinod Kothari, chartered accountant, is an author, trainer, and consultant on securitization, asset-based finance, credit derivatives, and derivatives accounting. Kothari is a visiting faculty member at the Indian Institute of Management, where he teaches structured finance.\u003c\/p\u003e  Securitization is a financial technique that pools assets together and, in effect, turns them into a tradable security. The end result of a securitization transaction is that a corporation can obtain proceeds by selling assets and not borrowing funds. In real life, many securitization structures are quite complex and enigmatic for practitioners, investors, and finance students. Typically, books detailing this topic are either too lengthy, too technical, or too superficial in their presentation. Introduction to Securitization is the first to offer essential information on this topic at a fundamental, yet comprehensive level—providing readers with a working understanding of what has become one of today's most important areas of finance.  \u003cp\u003eAuthors Frank Fabozzi and Vinod Kothari, internationally recognized experts in the field, clearly define securitization, contrast it with corporate finance, and explain its advantages. They carefully illustrate the structuring of asset-backed securities (ABS) transactions, including agency mortgage-backed securities (MBS) deals and nonagency deals, and show the use of credit enhancements and interest rate derivatives in such transactions. They review the collateral classes in ABS, such as retail loans, credit cards, and future flows, and discuss ongoing funding vehicles such as asset-backed commercial paper conduits and other structured vehicles. And they explain the different types of collateralized debt obligations (CDOs) and structured credit, detailing their structuring and analysis. To complement the discussion, an introduction to credit derivatives is also provided.\u003c\/p\u003e \u003cp\u003eThe authors conclude with a close look at securitization's impact on the financial markets and the economy, with a review of the now well-documented problems of the securitization of one asset class: subprime mortgages. While questions about the contribution of securitization have been tainted by the subprime mortgage crisis, it remains an important process for corporations, municipalities, and government entities seeking funding. The significance of this financial innovation is that it has been an important form of raising capital for corporations and government entities throughout the world, as well as a vehicle for risk management. Introduction to Securitization offers practitioners and students a simple and comprehensive entry into the interesting world of securitization and structured credit.\u003c\/p\u003e  Introduction to Securitization  \u003cp\u003eA comprehensive overview of securitization\u003c\/p\u003e \u003cp\u003eWith this book, Frank Fabozzi and Vinod Kothari bring together their extensive expertise in this field to present asset and financial managers, as well as finance students, with comprehensive information on one of the most important topics in modern-day finance.\u003c\/p\u003e \u003cp\u003eIntroduction to Securitization outlines the basics of securitization, addressing applications for this technology to mortgages, collateralized debt obligations, future flows, credit cards, and auto loans. The authors present a comprehensive overview of the topic based on the experience they have gathered through years of interaction with practitioners and graduate students around the world. The authors offer coverage of such key topics as: structuring agency MBS deals and nonagency deals, credit enhancements and sizing, using interest rate derivatives in securitization transactions, asset classes securitized, operational risk factors, implications for financial markets, and applying securitization technology to CDOs. Finally, in the appendices, the authors provide an essential introduction to credit derivatives, an explanation of the methodology for the valuation of MBS\/ABS, and the estimation of interest rate risk.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989466300645,"sku":"NP9780470371909","price":89.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780470371909.jpg?v=1761784214","url":"https:\/\/k12savings.com\/products\/introduction-to-securitization-isbn-9780470371909","provider":"K12savings","version":"1.0","type":"link"}