Securitization is a powerful and intricate mechanism at the heart of modern financial markets, transforming illiquid assets into tradable securities. For financial professionals, a deep understanding of this process is essential for effective risk management, capital market participation, and strategic asset allocation. This training course is designed to demystify securitization, providing a solid foundation in its core principles, the key players involved, and the meticulous process that underpins it all. By mastering these fundamentals, you will gain the expertise to analyze, evaluate, and engage with structured finance products with confidence.

This comprehensive 10-day program is meticulously crafted to be accessible yet thorough, bridging theoretical concepts with real-world applications. Participants will not only learn the mechanics of how assets like mortgages and auto loans are bundled and sold but also explore the legal and regulatory frameworks, credit enhancements, and cash flow structures that are critical to a deal's success. The curriculum is designed to equip a wide range of professionals—from analysts and risk managers to legal and compliance officers—with the knowledge they need to navigate the complexities of securitized products and position themselves as invaluable assets in their organizations.

Duration

10 days

Target Audience

• Junior and mid-level financial analysts
• Risk management professionals
• Fixed-income and credit traders
• Legal and compliance officers
• Credit analysts
• Investment bankers and portfolio managers
• Auditors and accountants
• Regulators and policy makers
• Students of finance and economics
• Anyone seeking a foundational understanding of structured finance

Objectives

• Define securitization and its role in global financial markets.
• Identify all key players and their responsibilities in a securitization deal.
• Master the end-to-end process from asset origination to security issuance.
• Understand the role and structure of a Special Purpose Vehicle (SPV).
• Analyze credit enhancement techniques and their impact on risk.
• Differentiate between various types of securitized products.
• Interpret cash flow structures and payment waterfalls.
• Evaluate the regulatory environment and its influence on securitization.
• Apply knowledge through a capstone project involving a simulated deal analysis.

Course Modules

Module 1: Introduction to Securitization

• What is securitization and why is it used?
• Historical context and evolution of the market.
• The benefits and risks of securitization.
• Key terms and definitions.
• Securitization's role in the broader economy.

Module 2: Key Players in a Securitization Deal

• The roles of the originator, issuer, and underwriter.
• The function of rating agencies and servicers.
• The importance of legal counsel and trustees.
• The role of investors and credit enhancers.
• The interdependencies between all participants.

Module 3: The Securitization Process

• The lifecycle from asset pooling to security issuance.
• The role of due diligence and data verification.
• How a portfolio of assets is selected.
• The legal transfer of assets to an SPV.
• Marketing and selling the securities to investors.

Module 4: Structured Finance and SPVs

• The concept of a Special Purpose Vehicle (SPV) or trust.
• Why SPVs are essential for isolating risk.
• The legal structure and corporate governance of an SPV.
• The role of bankruptcy remoteness.
• Examples of SPV structures.

Module 5: Credit Risk and Rating Agencies

• Understanding different types of credit risk in securitization.
• The role of credit rating agencies like Moody's, S&P, and Fitch.
• The rating process for securitized products.
• Interpreting credit ratings and their implications for investors.
• The impact of credit enhancements on ratings.

Module 6: Mortgage-Backed Securities (MBS)

• Introduction to residential and commercial mortgage-backed securities.
• The role of government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac.
• Understanding prepayment risk and extension risk.
• Different types of MBS, including pass-through and CMOs.
• Analyzing the performance of MBS in various market conditions.

Module 7: Asset-Backed Securities (ABS)

• Introduction to non-mortgage securitizations.
• Examples of underlying assets, such as auto loans and credit cards.
• The unique risks associated with different asset classes.
• How cash flows from these assets are structured.
• Case studies of notable ABS deals.

Module 8: Collateralized Debt Obligations (CDOs)

• What are CDOs and how are they created?
• The difference between synthetic and cash CDOs.
• The role of a collateral manager.
• Understanding the hierarchy of tranches in a CDO.
• The controversies and risks associated with CDOs.

Module 9: Legal and Regulatory Frameworks

• The legal basis for securitization and true sale opinions.
• Key regulations like the Dodd-Frank Act.
• The role of the SEC and other regulatory bodies.
• Disclosure requirements for securitized products.
• International differences in securitization regulations.

Module 10: Cash Flow Waterfall and Tranches

• The concept of a cash flow waterfall.
• How principal and interest payments are distributed.
• The structure of senior, mezzanine, and equity tranches.
• Understanding subordination and its role in credit enhancement.
• Calculating interest and principal payments for each tranche.

Module 11: Credit Enhancement Techniques

• The purpose of credit enhancement.
• Internal credit enhancement methods (e.g., subordination, overcollateralization).
• External credit enhancement methods (e.g., surety bonds, letters of credit).
• Evaluating the effectiveness of different credit enhancement strategies.
• How credit enhancements affect the risk profile of a security.

Module 12: Hedging and Derivatives in Securitization

• The use of interest rate and currency swaps.
• Hedging prepayment and other risks.
• Understanding Credit Default Swaps (CDS) in structured finance.
• How derivatives can be used to optimize deal structures.
• The risks and regulatory oversight of derivatives.

Module 13: Servicing and Administration

• The role of the servicer and their responsibilities.
• What happens when an underlying loan defaults?
• The role of the servicer in workout and foreclosure.
• How servicer performance is measured and monitored.
• The role of the trustee in protecting investor interests.

Module 14: Emerging Trends and Innovations

• The impact of technology and blockchain on securitization.
• The rise of green and ESG-linked securitizations.
• Changes in investor demand and market dynamics.
• Global trends in structured finance.
• New asset classes being considered for securitization.

Module 15: Capstone Project: Deal Analysis

• Participants will analyze a publicly available securitization deal.
• Identifying the key players and deal structure.
• Tracing the cash flow waterfall and credit enhancements.
• Evaluating the risks and potential returns for different tranches.
• Presenting their findings and conclusions to the class.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.