Balance sheet management via Receivable Securitization – by the numbers

Trade Receivable Securitizations is essentially a legal construct to get liquidity out of a diversified receivables portfolios with a different approach compared to factoring. You could call it more of a statistical approach rather than individual obligor underwriting.

The receivables are wrapped and sold to conduit. The sole purpose of the structure (or conduit) is to purchase and hold these receivables and the conduit finances these purchases with Asset Backed Commercial Paper (“ABCP”) issued to investors like money market funds, etc. ABCP are typically a short-term instrument that matures between 1 and 270 days (average of 30 days) from issuance and is issued by the structure.

The market for this type of paper has been declining steadily since the peak of 2007.

Asset Backed Commercial Paper Trend Series

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