Excess Spread — Boiling point, starring role, Liz loss

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Excess Spread — Boiling point, starring role, Liz loss

Owen Sanderson's avatar
  1. Owen Sanderson
13 min read

Homes are where the heat pumps are

Securitisation is the business of connecting bite-size retail-friendly finance to the mass of funding available in the capital markets, and a big part of any new issuer or asset class emerging is scaling up.

A new lender needs some critical mass, some capital, and some track record to approach an investment bank about a meaningfully-sized debt facility. Specialist funds and a few banks will do early stage deals, charging accordingly for the risk and accepting the smaller ticket size, but in general there’s a chicken-egg problem for new lenders; finance is available in spades once a platform has already shown it can use it.

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