Asset securitization arrangements
Asset securitization arrangements are operations that involve splitting off specific assets such as monetary claims (loans and bills discounted, accounts receivable, etc.) and real estate* from their owners and creating financial instruments based upon the revenue (cash flow) generated by these assets to raise funds.
Asset securitization methods include (1) the trust method (a method of entrusting assets and allowing investors to obtain beneficiary rights) and (2) the SPC method (a method by which assets are transferred to a corporation such as an SPC and securities are issued that treat these assets as collateral). The SuMi TRUST Group was an early pioneer of asset securitization arrangements. For example, we developed accounts receivable trusts in 1991 and we have been making active efforts to develop new products. As a result, the SuMi TRUST Group has currently secured a top class position in the asset securitization field among domestic financial institutions in terms of both quality and quantity. In addition to our asset securitization arrangements, we have also provided solutions to various management issues of our clients by making active use of our trust function.
*Real estate-related securitization is provided by the Real Estate Business.
Flow of the Trust Method of Business
- 1The monetary claim held by the customer is entrusted to the trustee, and in exchange, the creditor acquires a trust beneficiary right.
- 2Customers collect funds by transferring trust beneficiary rights to investors.
- 3Customers collect monetary claim from debtors in accordance to the administrative mandate agreement and deliver the said collected money to the trustee.
- 4The trustee uses the funds, etc. received as source for repayment of principal and dividend income for the trust beneficiary rights.
Flow of the SPC Method of Business
- 1The monetary claim held by the customer is transferred to SPC, and in exchange they receive from SPC a transfer of payments.
- 2SPC collects funds (transfer payments) by issuing ABCP to investors or by borrowing loans from banks.
- 3Customers collect monetary claim from debtors in accordance to the administrative mandate agreement, and deliver the said collected money to SPC.
- 4SPC uses the funds, etc. received as capital for repayment of the ABCP or for repayment of bank loans.