CHAPTER 15
SECURITISATION
In the strange world of modern finance you sometimes need to ask yourself who ends up with your money when you pay your monthly mortgage, or your credit card bill or the instalment payment on your car. In the old days you would have found that it was the organisation from which you originally borrowed and whose name is at the top of the monthly statement. Today you cannot be so sure because there is now a thriving market in repackaged debt – debt that is tied up in the bond markets.
Asset-backed securities
In this market a mortgage lender, for example, collects together a few thousand of its mortgage ‘claims’ (the right of the lender to receive regular interest and capital from the borrowers); it then sells those ...
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