CMA Final · Strategic Financial Management · Securitization
In a typical pass-through securitisation in India, which entity is created to buy the receivables from the originator and issue securities to investors?
The Special Purpose Vehicle buys the receivables from the originator and issues securities to investors. It is set up as a separate legal entity so the pool is isolated from the originator's own financial position. Rating agencies and exchanges do not hold the assets.
- ASpecial Purpose VehicleCorrect
- BCredit rating agency
- CServicer's parent company
- DStock exchange clearing corporation
Explanation
The originator sells its receivables to a Special Purpose Vehicle, usually a trust, which funds the purchase by issuing pass-through certificates or other securities to investors. Rating agencies and clearing corporations only assess or settle; they do not hold the pool.
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