7A.1  Investible assets

Securitisation of various cash flow assets began in the  1980s. Trade receivables, while not the  first asset class to be securitised, date back approximately 30 years. Trade receivables securitisations allow companies to raise  capital by selling,  on a revolving basis, a selection of receivables to a legally separate, bankruptcy-remote special purpose entity  (SPE). The SPE, with the  conveyance of the  acquired receivables, can issue collateralised notes with the  issuance proceeds flowing back  to the original selling  company. While comprehensive data as to the  existing size of the  trade receivables securitisation market is not available (much  of the  funding is done through individualised private transactions), existing outstanding securitisations amount to approximately USD80−100bn. Trade receivables from most industries and  numerous geographies can be considered eligible for inclusion.

Transaction sizes  generally range from USD50m to more  than USD1bn. Larger transactions are often funded with multiple funding sources, a trend that accelerated after the  Global Financial Crisis of 2008−9. While most transactions are funded in US dollars, depending on the  pertinent invoicing countries and  currencies, liabilities  can also be denominated in euros, sterling, Mexican pesos or other currencies. Transactions can incorporate receivables originating from multiple countries and  can involve both in- country and  cross-border receivables. Sellers/issuers and/or obligors can be unrated or below  investment grade, and  yet as a consequence of the structuring process, the  resulting securitisations can achieve investment grade ratings, thereby providing a positive credit arbitrage to the  seller  of the  receivables.

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