## Debt Securitisation
### Concept
Securitisation converts illiquid assets (like a pool of loans) into tradeable securities that can be sold to investors.
> Think of it as: a finance company turns its loan book into a product that anyone can invest in.
### Step-by-Step Process
| Step | What Happens |
|---|---|
| 1. Originator | A finance company (e.g., housing/auto lender) has many individual loans on its books |
| 2. Pooling | These loans are grouped into a single pool |
| 3. SPV Transfer | The pool is sold to a Special Purpose Vehicle (SPV) — a separate legal entity |
| 4. Securities Issue | SPV issues marketable securities backed by the loan pool to investors |
| 5. Cash Flow | Borrowers repay loans → SPV collects → SPV pays investors |
### Benefits
| To the Finance Company | To Investors |
|---|---|
| Raises funds quickly | Access to a liquid investment |
| Removes loans from the Balance Sheet | Invest in a diversified asset pool |
| Frees capacity to make more loans | Better returns than traditional instruments |