Put Your Business in a Box
Also opioids, old Chinese bonds and long Argentina bonds.
Just the name “whole-business securitization” sounds like it should be the final exam in Advanced Financial Engineering. Like, okay, fine, you have securitized mortgages and credit-card receivables and auto loans and corporate loans and aircraft leases, now securitize everything! It has a certain conceptual oddness? The point of securitization is that you take some steady stream of cash flows, separate them from the vicissitudes of the operating business that created them, and sell that pristine package to investors. The pristine package is “bankruptcy remote”; if the operating business runs into trouble, the securitized assets will keep paying and the investors won’t have to worry. But the point of whole-business securitization is that you take the cash flows of the entire business and sell that package to investors. It is bankruptcy remote from itself, somehow.
Here’s Bloomberg’s Claire Boston: