Structure: Traditional Securitization

These are the key parties involved in a traditional securitization transaction:

Asset Originator

• The Asset Originator is responsible for transferring the underlying assets, such as loans or receivables, to the Orphan SPV.

• This transfer is crucial for isolating the assets from the originator’s balance sheet, thus protecting the assets from the originator's financial risks.

Underlying Assets

• Specific receivable assets that are pooled together to back the Notes issued by the Orphan SPV.

• Cash flow from these assets is used to fund the payments required on the Notes.

Orphan Special Purpose Vehicle (Orphan SPV)

• Issues the Notes in the capital markets to the investors.

• Acquires the underlying assets using the proceeds from the Notes issuance.

• Isolates the credit risk of the underlying assets from its own credit risk, ensuring that only the cash flow from the underlying assets is used to fund the payments on the Notes.

• Grants security over the underlying assets to the Trustee for the benefit of the investors.

Trustee

• Holds the security over the underlying assets on behalf of the investors.

• Ensures that the investors' interests are protected and that the payments from the underlying assets are properly managed.

Investors (Noteholders)

• Purchase secured, limited recourse notes (the Notes) issued by the Orphan SPV.

• Obtain exposure to specific underlying receivable assets (the Underlying Assets) without directly holding them, thus avoiding associated risks and balance sheet impacts.

• Rely on the cash flow from these underlying assets to receive payments on the Notes.

Auditor

• The Auditor checks the financial records to make sure everything is accurate.

• This builds trust by ensuring that all financial information is correct and reliable.

Broker

• The Broker helps buy and sell the Notes in the market.

• Some securitizations involve a Broker to facilitate trading, but it’s not always necessary. When used, the Broker makes it easier for investors to trade these Notes, keeping the market active.

NAV Calculation Agent

• The NAV (Net Asset Value) Calculation Agent determines the value of the assets and calculates the value of the Notes.

• Not all securitizations use an NAV Calculation Agent, but when they do, accurate calculations help investors know what their investment is worth and ensure everything runs smoothly.