Securcor has successfully provided customized financial solutions to the equipment, vehicle, and consumer finance industries.
Our team has the insight and expertise to tailor the deal structure that will work best for you.
Securitization and Structured Finance
We are adept at working with both traditional and non-traditional asset types and structures. Our team of securitization and structured finance professionals create innovative financing alternatives in addition to meeting your needs from day to day operations.
Risk Assessment and Management
Securcor’s disciplined approach to risk management includes clearly identifying your risk objectives, and then measuring, monitoring and managing various risk exposures. Risk based management information, internal and external audit, and asset inventory systems also greatly enhance our risk adjudication. By managing risk, we manage success.
Starting with the initial planning stage through to legal documentation, our success is built on careful planning and expertise. From tax-efficient structuring to knowing the fine points of the legal and regulatory environments, Securcor provides a multi-disciplinary approach to ensure the best solution for your business.
Account Management and Administration
Securcor’s attention to detail ensures the highest level of corporate governance standards are met. Our knowledgeable staff is available to support securitization transactions throughout the process: from credit adjudication, contract due diligence, accounting assistance and monthly monitoring and reporting on securitized portfolios to periodic audits and ongoing management of customer compliance with the terms and conditions of securitization agreements.
Securitization is the sale of receivables between two parties. One of the parties (the “Seller”) is the company selling the receivables and the other is a special purpose vehicle (the “SPV”), an entity that buys the receivables.
The SPV issues debt obligations in order to raise funds that are then used to purchase the receivables from the Seller. After the initial sale, the SPV uses the collections received on the receivables (which it now owns) to pay the interest and principal on the debt obligations that it has issued. Once the obligations of the SPV have been satisfied, all remaining collections on the receivables are then returned to the Seller.
From certain credit enhancements structured into the securitization transaction, the SPV is privately rated and enjoys the lowest possible cost of funds. If the Seller uses the proceeds on the sale of receivables to retire its debt, the interest costs on that debt are then essentially replaced by the interest costs of the SPV because all cash flows over and above those required to satisfy the SPV obligations are returned to the Seller.
The Seller continues to service the securitized portfolio so the transaction is seamless to the lessee, the Seller’s client.
Benefits of Securitization
New Source of Funds
For companies seeking an alternative to a traditional funding source, a sale of receivables can achieve this.
By utilizing a Net Present Value cash flow model as the base amount for the securitization advance, the result is a strong cash flow that normally exceeds the Net Book Value of the securitized portfolio. Also, the securitization eliminates any negative cash flow through the term of the lease.
Through accessing the private capital markets, the securitization structure has been simplified making it easier to understand and more importantly, simple to administer. Our experience with these transactions provides Sellers with a proven alternative to traditional financing sources.
Low Cost Financing
The securitization structure allows for a lower achievable cost of financing as the credit quality of the receivables are enhanced through structuring.
Off Balance Sheet Financing
Under certain circumstances, it is possible to achieve off balance sheet funding.