An Introduction to Securitization

A prominent European securitization fund with more than seven years of continuous operation in Luxembourg, Icon Capital Sarl endeavors to deliver reliable, safe securitization services to its clients. Securitization funds such as Icon Capital Sarl create financial instruments, known as “securities,” by combining a number of other financial assets. Once securitization funds create a new asset, they establish tiers and market them to a wide variety of investors.

The classic example of securitization is the mortgage-backed security (MBS), which combines hundreds, or even thousands, of mortgages into a larger pool. From that point, the issuer of the security can separate the pool based on default risk and sell the smaller pieces to investors. Using the MBS and other pooled-asset securities, investors gain access to a type of bond without the large investment typically required for entry into a large pool. As such, financial professionals often point to the capacity of securitization to create liquidity in markets.

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