PT - JOURNAL ARTICLE AU - W. Alexander Roever AU - Frank J. Fabozzi TI - A Primer on Securitization AID - 10.3905/jsf.2003.320307 DP - 2003 Jul 31 TA - The Journal of Structured Finance PG - 5--19 VI - 9 IP - 2 4099 - https://pm-research.com/content/9/2/5.short 4100 - https://pm-research.com/content/9/2/5.full AB - Securitization is a form of financing where financial assets with predictable cash flows are pooled and sold to a specially created third party that has borrowed money to finance the purchase. The risk for the investor or lender is tied to the repayment of the financial assets rather than to the performance of a particular company, project, or other entity. The cash flow generated by the financial assets can be used to support one or more securities that may be of higher credit quality than the underlying company's secured debt. The borrowed funds are raised through the sale of asset-backed securities, which can take the form of either commercial paper or bonds. In this article, the authors describe the basics of securitization, the motivation for its use, and considerations in selecting the form of a securitization (multi-seller conduit versus term execution). Among the potential benefits of securitization are reduced funding costs, increased liquidity, diversified funding sources, earnings acceleration and management, and off-balance-sheet financing.