Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Securitisation definition

What does Securitisation mean? Securitisation is a financing technique that converts non‑tradable, income‑producing assets into tradable securities by pooling exposures and issuing notes backed by their cash flows. In practice, an originator sells receivables (for example, mortgages, consumer loans or trade receivables) to a bankruptcy‑remote special purpose vehicle (SPV/SSPE), which issues asset‑backed securities, usually in tranches (senior, mezzanine and junior). Alternatively, in a synthetic securitisation the credit risk is transferred by credit protection while assets remain on the originator’s balance sheet. Key legal features include: achieving a true sale or effective risk transfer; perfection/notification of assignments (assignation in Scotland); security and trust arrangements; servicing...

UK securitisation and asset-based lending: structure, true sale, SPV bankruptcy remoteness, enforcement (capital market exception), and restructuring challenges

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Rationale

Securitisation is the transfer of sizeable portfolios of income‑generating Assets to a special purpose vehicle (SPV). The SPV finances the purchase price by issuing interest‑bearing securities—commonly termed ‘bonds’ or ‘notes’—into the capital markets. These securities benefit from security over the assets and/or the cashflows they produce (the ‘receivables’). Cashflows from the receivables are applied to pay interest and to repay principal on the securities.

Types of receivables that can be securitised include:

mortgage payments
bank loan repayments
lease/rental payments
credit card repayments
insurance premium payments

Benefits of securitisation include:

cheaper borrowing—the SPV may achieve a higher credit rating than the debtor company (originator). Either the obligors for the receivables carry a stronger rating than the originator, or credit rating agencies may find it simpler to rate a single asset (the receivables) rather than the originator, which presents more variables...

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Web page updated on 22/05/2026

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