An article in Laprensagrafica.com reports that "In 2011, $3.555 billion was traded on the BVES compared to the previous year when a total of $2.59 billion was traded. The source also reported that both the public and the private sector earned $3.55 billion in financing. Furthermore, securities released by three municipalities and a private school totaled $47 million. "
Securitization is a financing mechanism by which independent assets are created, called Securitization Funds, from the sale of, depending on the case, assets that generate cash flows, and administered by companies formed for this purpose. The purpose of these assets is only to create payments for the publicly offered shares issued by the Fund.
In the process of securitization, the originator transfers assets to an independent estate called a Securitization Fund. This fund is managed by a Securitization Company, and serves as collateral for the issue of securities. As a product of the release of securities issued by the Fund, the originator gets the funding they want.
Seen from a practical perspective and in summary, securitization is a mechanism to raise cash immediately, from assets which are illiquid now but which will become liquid in the future.
Source: laprensagrafica.com
More on this topic
March 2012
The BVES anticipates $100 million of securitization processes in 2012, nearly triple the $39 million securitized in 2011.
The president of the Stock Exchange of El Salvador (BVES), Rolando Duarte, said that this year the securitization of assets or future cash flows of private and public companies would total about $100 million, reported ElSalvador.com.
November 2011
Risking future income rather than tangible assets is a good choice for investment financing, using working capital or debt restructuring.
Securitization of future income is an instrument used for the first time by the Liceo Frances on El Salvador’s Stock Exchange.
The organization placed its bonds on the market and raised capital to expand its educational facilities.
December 2011
In the last 11 months, 4 projects have netted $37 million using this mechanism.
Municipalities and schools are some of the entities that have used, successfully, sales of bonds backed by income streams, in order to finance their projects.
This has been revealed from data from the Salvadoran Stock Exchange which announced that to date, more than $37 million has been raised using this method of financing.
May 2012
In the absence of state resources for public infrastructure projects, securitization is an alternative for funding.
El Salvador is in a second phase of securitization, where the focus is on generating assets that can be securitized, and future market opportunities are investment opportunities from financial assets, said the expert Jose Miguel Valencia.
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