The Parts are Greater than the Whole: How Securitization of Divisible Interests Can Revolutionize Structured Finance and Open the Capital Markets to Middle-Market Companies

Abstract

Taken from Introduction to paper: Structured finance, although only a recent innovation, nonetheless is becoming one of the dominant means for capital formation in the United States.1 Also known as asset securitization, structured finance refers to an approach used to raise capital whereby income-producing [financial] assets are pooled and converted into capital market instruments. In a typical [structured] financing, a sponsor transfers a pool of [financial] assets to a limited purpose entity, which in turn issues [in the capital markets] non-redeemable debt obligations or equity securities with debt-like characteristics. Payment on the securities depends primarily on the cash flows generated by the pooled assets.