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

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8.1 SERVICING AND REPORTING

The activity of the underlying securitized assets must be tracked separately from the rest of the on-balance-sheet portfolio on a monthly or quarterly basis and, in certain circumstances, on a daily basis. Ongoing transaction reporting is a crucial part of any securitization, not only for the deal originators themselves, but more so for the investors, rating agencies, trustees, and other interested parties.

Transaction reporting has become increasingly important over the past 5 years, particularly for the development of any secondary market in these products. This was further accelerated by the credit crisis, resulting in investors placing much less reliance on the rating agencies as part of their analytical process. The times have gone when portfolio managers were able to write a single A4-page deal analysis accompanied by the rating agencies’ pre-sale reports in order to get a signoff for a USD50m structured finance bond with a view to hold this for the next 14 years. Structured finance bond analysis has become increasingly sophisticated, which in turn has raised the levels of demand for deal-related information and performance data.

Following the credit crisis, investors have—for the first time in the past decade—been able to demand very detailed asset information, depending on the relevant asset class sometimes down to the loan-by-loan level; and the originators of such papers which have grown accustomed to these demands are happily ...