Is securitisation a debt?

Securitization is a process that involves pooling together debt and grouping it into portfolios. This method allows for the creation of marketable financial instruments that can be traded on the market.

One of the key benefits of securitization is that it allows for the diversification of risk. By combining multiple assets into a single security, investors are able to spread their risk across a wider range of underlying assets.

Securitization has become increasingly popular in recent years, particularly in the field of asset-backed securities. These securities are backed by a pool of assets, such as mortgages or auto loans, and are designed to provide investors with a stable and predictable source of income.

The process of securitization begins with the issuer identifying various financial assets that can be combined into tranches. These tranches are then packaged into a single security that can be sold to investors.

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