Securitization and Structured Finance Post Credit Crunch: A Best Practice Deal Lifecycle Guide

4

Sound practice principles

This chapter introduces sound practice principles for the structured finance market and subsequently applies those throughout the generic deal lifecycle chapters that will follow.

You may have noticed that I prefer calling these “sound” rather than “best” practice principles—although the book’s subtitle calls them “best”—but that refers to marketing. I guess there are different ways of doing things and I would not like to suggest that any of the principles that follow are the best ones around—but they are what I consider to be at least sound.

Furthermore, what’s best for one may not be best for another: due to the sometimes polarized nature of the various key players (e.g., originators, investors, trustees, and other counterparties to transactions), we may always need to consider a certain tradeoff and find a balanced but still agreeable approach.

For instance, from an investor’s perspective I would always ask for as much information from the originator as possible if I were to invest in a particular transaction. But from the originator’s perspective I would be reluctant to release more information to investors than really needed in the originator’s view. Such contravening attitudes will always exist in this market and I am not on a quest to overcome those.

What I would hope instead is that the following principles are sufficiently sound to support the rise of a new and improved market, each being equally pragmatic enough so that market participants ...