Abstract
Corporate securitization offers companies a financing solution that falls along the continuum between classical securitizations and unsecured straight corporate bonds, providing access to cheaper funding through structured credit. The notes issued by the borrower are funded by future cash flow generated by a business activity. In order to reach investment-grade credit quality, these hybrid vehicles use securitization-style financing structures and rely on a combination of restrictive covenants-both on the business financial profile and on its activity-and credit and liquidity enhancements to fund often-complex operating businesses at high levels of debt leverage. In addition to the infrastructure and healthcare sectors, various commercial endeavors have been the source of new issuance over the past decade, including football stadiums, public houses (pubs), Formula 1 racing licensing, champagne bottling, funeral homes, and forestry. While these sectors are disparate, it is clear that corporate securitizations are generally prevalent in industries that have utility or “utility like” strong, stable cash flows, as well as high barriers to entry and predictable operating expenditures and maintenance capital expenditures (capex). These industries also tend to have modest-growth capex requirements, and a mature, established track records. <b>TOPICS:</b>Fundamental equity analysis, accounting and ratio analysis, technical analysis
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