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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: securitisation: background: true sale/asset-backed securitisation: example

True sale/asset-backed securitisation

Diagram of a true sale/asset-backed securitisation.

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A charitable trust is formed that owns the equity in an issuer SPV.

The originator company sells suitable assets to the issuer SPV.

The issuer SPV raises the finance to purchase the assets from the originator by issuing bonds to third party investors which represent both interest and principal.

Any ongoing surpluses made by the issuer SPV are passed back to the originator.

Any residual profit left in the issuer SPV is passed back to the charitable trust.