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FINANCIAL MARKET COURSES

Securitization

Courses In This Course

Securitization is the process by which loans or receivables are pooled together and converted into marketable securities. Cash flows from the loans or receivables support payments on the related securities. This course covers the process of securitization and looks in detail at both mortgage-backed (including the commercial and European markets) and asset-backed securities.

Objectives

Topics covered in this course include:

The securitization process

The fundamentals of mortgage-backed securities, including the commercial and European MBS market

The fundamentals of asset-backed securities, with particular emphasis on the credit card ABS market

The features and applications of collateralized debt obligations (CDOs)

Learner Profile

This course is designed for:

New or recent recruits to banking and financial organizations

Risk management personnel

Treasury department staff

Operations and support staff

Finance and accounting staff

IT staff

Compliance and regulatory staff

  •    SECURITIZATION - AN INTRODUCTION

    Overview

    The process of securitization collects together financial assets, such as mortgages, into a single pool. The returns generated by a collection of such assets are more predictable than returns on individual assets. Securities backed by the pool can then be issued to investors and the returns on such securities are linked to the returns on the assets.

     

    This course examines in detail the main elements of the securitization process, providing information on a variety of topics including the main players involved in the process, the construction of the securities, and the motivations for a securitization.

    Course Duration

    90 mins

    Prerequisite Knowledge

    Bonds - An Introduction

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  •    SECURITIZATION - MORTGAGE-BACKED

       SECURITIES (MBS)

    Overview

    This course focuses on mortgage-backed securities, both in the United States and elsewhere on the globe. It examines the scale of the markets and the key characteristics as regards the underlying collateral and the construction of the subsequent securities. In particular, it highlights the areas of prepayment risk and the sequential repayment of different classes of mortgage-backed securities.

    Course Duration

    90 mins

    Prerequisite Knowledge

    Securitization - An Introduction

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  •    SECURITIZATION - EUROPEAN

       MORTGAGE-BACKED SECURITIES

    Overview

    This course focuses on European mortgage-backed securities (MBS). It is important to analyze MBS in Europe, as distinct from the United States, as there are important differences.

     

    The European MBS market originated in the UK in 1987, whereas the first MBS securitization in the US was way back in the 1960s. Despite significant progress in European integration, Europe still has different legal, political and economic country frameworks, whereas the MBS framework in the US is homogenous across all states.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Securitization - Mortgage-Backed Securities (MBS)

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  •    SECURITIZATION - COMMERCIAL

       MORTGAGE-BACKED SECURITIES

    Overview

    Mortgage-backed securities can be classified as residential or commercial mortgage-backed securities (CMBS). This course focuses on the CMBS market, which is more varied and complex than its residential mortgage-backed equivalent. The CMBS market grew tremendously in the years leading up to the global financial crisis, as investor appetite for real estate products increased and interest rates remained relatively low. CMBS products were pivotal in distributing risk across a wide variety of investors.

     

    This course will cover the mechanics and structures of CMBSs, the analysis of CMBS collateral, and the rating of CMBSs. As with the RMBS market, the CMBS market in the US developed much earlier, and has traditionally been the innovator of new products. In this course, descriptions refer to the US CMBS market, unless otherwise stated.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Securitization - Mortgage-Backed Securities (MBS)

    Securitization - European Mortgage-Backed Securities

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  •    SECURITIZATION - ASSET-BACKED

       SECURITIES (ABS)

    Overview

    Although the residential mortgage-backed securities (RMBS) market accounts for the majority of securitized transactions, the basic securitization technique is asset-independent. This course looks at how securitization has evolved to face the challenges presented by different asset classes. In addition to descriptions of some of the major classes outside of RMBS, the course also examines how the markets for the associated securities operate and how valuation techniques have been developed to cope with the idiosyncrasies associated with securitization.

    Course Duration

    120 mins

    Prerequisite Knowledge

    Securitization - An Introduction

    Securitization - Mortgage-Backed Securities (MBS)

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  •    SECURITIZATION - CREDIT CARD ABS

    Overview

    Asset-backed securities (ABS) are bonds backed by a pool of financial assets that cannot easily be traded individually. Since 1987, when credit card asset-backed securities were first issued, the credit card ABS market has become the primary funding vehicle of unsecured loans to consumers within the credit card industry.

     

    The ABS market is a growing segment of the global capital markets. As of June 2005, nearly USD 1.85 trillion in ABS issues was outstanding - approximately 20% of this market is represented by securities backed by credit card receivables.

     

    This course focuses on the functioning, importance, and performance evaluation of credit card ABS.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Securitization - Asset-Backed Securities (ABS)

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  •    SECURITIZATION - CDOS - AN INTRODUCTION

    Overview

    A collateralized debt obligation (CDO) is a security backed by a pool of loans, bonds or other securities. A CDO deal is broken into multiple tranches, each with separate maturity and credit risk, appealing to different classes of investors. Various forms of credit enhancement are used and CDO tranches are rated by the main credit rating agencies. CDOs represented the fastest growing segment of the securitization market in the years leading up to the global financial crisis of 2007/9.

     

    This course explains how CDOs are issued and structured, and outlines the common issuer and investor motivations for entering CDO deals.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Securitization - An Introduction

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  •    SECURITIZATION - CDOS - STRUCTURES

       & RATINGS

    Overview

    In terms of structure, there are two types of collateralized debt obligation (CDO): cash flow CDOs and market value CDOs. They differ crucially in the way collateral is used to generate cash flows to pay noteholders, in how the structure is credit-enhanced, and in how the underlying collateral pool is managed. The ratings process for these structures also differs.

     

    In this course, we will examine the structural differences between cash flow and market value CDOs. We will also observe how these instruments are rated, which is crucial to the pricing of a CDO. Finally, we will look at some commonly used exotic CDO structures.

    Course Duration

    75 mins

    Prerequisite Knowledge

    Securitization - CDOs - An Introduction

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