Securitization

Annually, securitization of financial assets is a $2 trillion international industry. For more than a decade, Holland & Knight’s Asset Securitization Practice has represented issuers, underwriters and investors in term and conduit asset securitization transactions and securitized lending in the United States and internationally.

While most transactions are still U.S.-based, securitizations have spread to Europe, Latin America and portions of Southeast Asia. In its simplest form, a securitization involves the sale by the originator of a pool of receivables to a special purpose entity, such as a trust, that issues debt securities secured and funded by the receivables in private placements and public offerings to banks and other institutional investors. This results in an off-balance sheet transaction; the acceleration of the proceeds of the receivables; a credit rating for the issued securities that are usually substantially more favorable than the rating of the originator, thus lowering the cost of financing; and, because the originator usually continues to service the receivables, the transparency of the transaction to third parties.

There is virtually no form of receivable or debt obligation that cannot be securitized, or asset that cannot be isolated in a securitized loan transaction. This includes motor vehicle loans and leases; recreational vehicle and boat loans; real property mortgages; timeshare unit purchase loans; trade receivables; project finance receivables, including from the sale of natural resources such as oil, gas and minerals; credit card receivables; and airplane ticket receivables. Even receivables arising from lottery winnings and record album sales have been securitized.

Lawyers in Holland & Knight’s Asset Securitization Practice have represented issuers, underwriters and investors in securitization transactions in the United States and internationally for over ten years. The group also utilizes its capabilities in structuring special purpose entities to enhance more traditional forms of financing.

Representing issuers, Holland & Knight has the ability to conduct due diligence; create a preliminary structure for the transaction; identify and obtain underwriters to complete the structuring and place or underwrite the offering; work with the rating agencies and satisfy their concerns; draft transaction documents; deal with local and international tax issues; issue the legal opinions that are the critical underpinnings of all securitization transactions; and organize and coordinate the entire transaction, including the selection and management of local counsel.