The Phoenix of Securitization: Irish Banks test the market

In the last week there have been two largely un-noticed events, namely the fact that two Irish banks have put a securitization offering on the market.

What is securitization? By definition it is the aggregation of similar instruments into a negotiable security. If you didn’t get that I’ll put it in plain-speak. You can take any object that provides a degree of income and put them all in a big box, you then sell the box as an actual financial investment. How does that work with Irish banks? A bank will take a bundle of loans (generally of a certain class – loans with similar loan amounts, loan to values, term of loan etc.) and put them all into this box and when they sell the box that is described as a ‘securitization‘.

The benefit for the buyer is that there is a structured income stream from the box of loans, even if a …

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