Securitization

Pronunciation: /sɪˌkjʊrətəˈzeɪʃən/

Securitization (noun)

  1. A process where future payments from loans or receivables are grouped and sold as tradable financial products.
  2. A method of moving credit risk by selling claims on a pool of assets to investors through securities.

Examples

  • Securitization turns debts into securities that investors can buy.
  • The bank uses securitization to turn debts into securities for sale.