Securitization Course – Structured Finance

Structured Finance - Securitization Course

What Does a Securitization Course Cover?

From asset-backed securities to credit-linked notes, our structured finance course was designed to include all aspects of securitization. Securitization is the process through which loans or debts are pooled together to create a new debt security. Although corporate debt is typically an IOU, by which the issuer agrees to pay interest in addition to repaying the principal amount borrowed, the note created in the securitization process relies on the underlying loans used in the pooling process to pay interest and repay debt.

These underlying assets may include:

  • Residential mortgages
  • Commercial mortgages
  • Bonds
  • High yield or junk loans
  • Credit cards
  • Automobile loans
  • Student loans

Once created, securitized notes may then be issued as a single note or sliced up to create different tranches, such as in Collateralized Mortgage Obligations (or CMO’s) or Commercial Mortgage Backed Securities (or CMBS). No matter what the underlying loan, investors look to the underlying cash flows to ensure interest and principal payments are made. The many structures that play a role in how cash flows are prioritized will be analyzed.

The GFMI Securitization Course

After taking a GFMI securitization course, participants will be able to:

  • Explain the features and characteristics of Asset Backed Securities (ABS) including:
  • Terminology
  • Structures
  • Describe the main applications of ABS
  • Identify the main risks
  • Analyze best practices in risk management
  • Explain the basics of pricing and the corresponding assumptions
  • Discuss capital requirements
  • Describe how accounting works for securitization
  • Discuss current market trends

Securitization Course Requirements:

  • Prerequisites: Fundamentals of the Securities Industry, Fixed Income or equivalent knowledge
  • Program Level: Foundation
  • Advance Preparation: None
  • Recommended CPE Credits: 7

This course is broken down into six separate sessions:

  • By the end of Session 1: Introduction to Asset Backed Securities, participants will be able to define an ABS and describe their features and characteristics. The differences between an ABS and MBS (Mortgage Backed Securities) will be discussed, as well as an identification of the main participants in the ABS market.
  • Session 2: Asset Securitization will cover the two main ABS collateral categories, amortizing loans and revolving receivables, and identifies the reasons for securitization. Many different structures will also be covered, including pass-through and pay-through structures, collateralized bonds, trust forms, commercial paper conduits, and revolving paydown structures.
  • Session 3: Identifying and Managing Risks in ABS covers the various risks inherent in ABS, including credit risk, liquidity risk, guarantor risk, legal risks, among others. This session will illustrate the usage of a swap to manage interest rate risk and describe pre-issuance risk mitigation measures while identifying best practices in risk management. Major risk management techniques, such as over-collateralization and reserve accounts, will also be covered.
  • Session 4: Valuing Asset Backed Securities will teach participants to understand the nominal yield versus the price and will be able to discuss changes in value given a change in prepayment rate, default rates, and loss given default.
  • Session 5:  Overview of Accounting for Securitization and Capital will give an overview of accounting for securitization and capital, and will describe the characteristics of a transaction that are necessary to achieve sale treatment.
  • In the final session of the course, Session 6: Current Trends, participants will be able to discuss current trends in the market, including reaching for yield and the impact of the current regulatory environment, including Dodd-Frank, capital requirements for securitization and the Volker rule.

For more information on this course, please contact GFMI at +1 516.935.0923 or