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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: securitisation: background: basic terminology

Basic terminology

The Originator: entity which wishes to securitise income generating assets - for example, a bank or building society with a block of mortgages.

Original borrowers/customers: the debtors of the Originator’s business - for example, mortgage borrowers or credit card customers.

Assets: underlying asset sold or transferred by Originator to Issuer. Depending on the precise nature of the securitisation, it will normally be payments rights (that is, receivables) extracted from particular customer accounts or contracts, rather than the customer accounts or contracts as such, that are transferred.

Issuer: the entity - usually an SPV - which acquires the assets and issues bonds or securities in the market. Alternatively, the Issuer may on-lend to another SPV which acquires the assets.

Asset Backed Securities (ABS): the bonds or securities issued as part of the securitisation in the market by the Issuer (SPV) - there are a number of sub-classifications based on the type of asset involved. The most common are

  • MBS Mortgage Backed Securities
  • CMBS Commercial Mortgage Backed Securities
  • RMBS Residential Mortgage Backed Securities

SPV: Special Purpose Vehicle

Third party investors: investors who buy bonds or securities issued by the Issuer SPV.