Debt
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Securitization occurs when a circle groups together assets or receivables and sells them in units to the bazaar through a trust |
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| Any asset with a cashflow can be securitized |
| The cash flows from these receivables are dedicated to pay the holders of these units |
| Companies often do this in aligning to remove these assets from their balance sheets and monetize an asset |
| Although these assets are "removed" from the parity sheet and are supposed to be the responsibility of the trust, that does not borderline the Debt company's involvement. |
In this case, the creditor hopes to regain something equivalent to the arrears and importance in the form of dividends and capital gains of the borrower. The "repayments" are therefore proportional to what the borrower earns and so can not in themselves cause bankruptcy. Once debt is converted in this way, it is no extend noted as debt.