Securitization typically:
›› Provide flexible access to capital, in amounts limited only by the quality of assets available for securitization. Rather than relying on a lender, companies can use securitization to secure additional working capital or acquisition for finance.
›› Do not necessarily require an offering process.
›› Enable companies to efficiently increase or decrease borrowing levels within a short period of time.
- ›› Allow some companies to finance their assets off-balance sheet, thus increasing their leverage capabilities without negatively impacting debt-to-equity ratios.
- ›› Lower a company’s borrowing cost by more directly accessing the capital markets.
- ›› Decrease borrowing rates by offering financing based on quality of the securitized assets (or obligors) rather than the credit rating of the sponsoring company.
- ›› Avoid or delay equity dilution.
- ›› Permit business expansion to be based primarily on marketing and acquisition activity, rather than the ability to increase debt or willingness to raise expensive capital.
