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Top Articles - Credit Card Securitization An Overview
Securitization is the packaging of a chosen group of loans with a suitable level of credit improvement, and the redeployment of these packages to investors. Investors purchase the repackaged
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
assets in the form of securities or loans, which are secured on the original pool and its connected income stream. Securitization thus changes illiquid assets into liquid ones.
A huge bulk
A huge bulk
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
of credit card securitization has been accomplished using two dissimilar vehicles - the individual trust and the master trust. The individual formation is a solitary pool of receivables sold
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
to a trust and used for a single security. When the issuer plans to give out another security, it must assign a new group of card accounts and put up for sale the receivables in those accou
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
ts to a different trust.
The master trust constitution lets the issuer generate numerous securities from the same pool of receivables. The master trust acts as a pool of receivables to whic
The master trust constitution lets the issuer generate numerous securities from the same pool of receivables. The master trust acts as a pool of receivables to whic
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
h receivables are added from time to time to give out more securities. The master trust allows the issuer-improved flexibility.
One of the exceptional characteristics of credit card securit
One of the exceptional characteristics of credit card securit
ucts have become life saving products for the pharmaceutical companies who doesnt have many innovative molecules in their product pipeline and have been inc
zation is the small cycle of the receivable (4-5 months). The standard amortization arrangement used in automobile loans, home loans and the like does not apply in case of credit cards. If t
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
he collections from the borrowers were to be passed straight to the investors, the investors would get paid in around 5-8 months.
This is neither advantageous nor cost-effective. Thus, an e
This is neither advantageous nor cost-effective. Thus, an e
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
clusive structure is worked out to give a longer life to the security compared to the normal settlement time of a credit card receivable. The technique involves dividing the receivables into
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
finance costs and principal. While the finance fees are employed for paying the coupon on the security, the main settlement is dealt with in any of the two ways:
A. Revolving method: Under
A. Revolving method: Under
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
this process, the major repayment every month is given to the issuer for purchasing new receivables.
B. Controlled repayment: Under this construction, the main repayment is divided into con
B. Controlled repayment: Under this construction, the main repayment is divided into con
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
rolled pre-fixed amortization and is utilized to retire the security over a set period, say a year. The surplus of main collection in any month is reinvested in purchasing new receivables wi
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
th which the shortfall, in any month, is covered.
Another important characteristic of credit card securitization is the lack of asset support. Credit card receivables proffer no security in
Another important characteristic of credit card securitization is the lack of asset support. Credit card receivables proffer no security in
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
the possibility of cardholder non-payment. As a consequence, recoveries are restricted.
The main "players" in the cycle of securitization are:
Originator This is the entity that either c
The main "players" in the cycle of securitization are:
Originator This is the entity that either c
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
reates Receivables in the normal route of its business, or buys and collects portfolios of Receivables. Its counsel works intimately with counsel to the Underwriter/Placement Agent and the R
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
ting Agencies in arranging the deal and organizing documents.
Issuer It is the exclusive purpose entity, generally an owner trust, formed pursuant to a Trust Agreement between the Origina
Issuer It is the exclusive purpose entity, generally an owner trust, formed pursuant to a Trust Agreement between the Origina
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
tor and the Trustee. It gives out the Securities and prevents taxation at the entity level.
Trustees It is generally a bank or other entity sanctioned to act in such ability. The Trustee,
Trustees It is generally a bank or other entity sanctioned to act in such ability. The Trustee,
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
selected pursuant to a Trust Agreement, holds the Receivables, gets payments on the Receivables and makes payments to the Security holders.
Investors They are the final buyers of the Secu
Investors They are the final buyers of the Secu
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
rities - usually banks, insurance companies, retirement funds and other "competent investors." In a number of cases, the Securities are bought in a straight line from the Issuer, but more fr
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
quently the Securities are issued to the Originator or Intermediate SPE as compensation for the Receivables and then sold to the Investors, or in the case of a guarantee, to the Underwriters
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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