Tagged: Securitization

Creating Mortgage-Backed Securities through Securitization

Securitization pic


An experienced financial trader, Dirk Coetzer is the managing director of Firminy Equity Fund and ICON Capital Sarl, LLC. From his office in Luxembourg, Dirk Coetzer oversees the fund’s alternative investments and securitizations.

Securitization is the creation of liquid assets from illiquid assets through a tailored financial process. The mortgage-backed security (MBS) is perhaps the most recognized form of securitization. An MBS is formed through an intricate process that begins with a financial institution (the originator) collecting mortgages secured by properties. The originator then bundles these mortgages into groups based on factors such as their level of risk, their due dates, and their remaining balances. Each individual group is then presented as collateral for an MBS. The MBS is issued by an investment bank or a regular bank, and the security is sold on the secondary mortgage market, giving it liquidity.

Creditors benefit from securitization because division of ownership reduces the associated risks of holding an MBS. Investors, on the other hand, get to diversify their portfolios and earn a return derived from both principal and interest payments on the mortgages.


Securitization’s Importance




Trade finance specialist Dirk Coetzer currently serves as managing director for ICON Capital and Firminy Capital. Both of these firms headed by Dirk Coetzer are headquartered in Luxembourg and engage in securitization.

According to a Pricewaterhousecoopers publication, prior to the financial crisis which started in 2008, securitization was the preferred instrument for a large number of issuers and a rapidly growing contributor to the world capital markets. During the financial crisis it reputation was tainted.

When the financial crisis subsided, it was proven that transparent and simple securitization with high-quality assets had defaults that were within expectations. Economists as well as politicians have come to the conclusion that securitization should play a major role in capital markets.

In connection, in February 2015, the European Commission produced its Green Paper on the Capital Markets Union. One of its stated agendas is to establish a plan for high-quality securitization in the European Union, as securitization is viewed as a critical component of properly functioning financial markets.

As the paper states, a standardized, transparent, and simple securitization framework should be established. Securitization that meets these principles will profit from better treatment from regulatory authorities.

Firminy Equity Fund

Firminy Capital Sarl, a securitization company headquartered in Luxembourg, operates under the management of Dirk Coetzer. Like many professionals, Dirk Coetzer and his associates benefit from the financial edge gained by doing business in a prosperous foreign country. The laws of Luxembourg permit individuals and corporations to protect a portion of their assets by putting them into securitization funds. Firminy Capital Sarl handles a number of these funds, most notably Firminy Equity Fund.

Securitization funds in Luxembourg are classified as either “mono” or “dual.” Firminy Equity Fund falls into the former category, and is further identified as an umbrella fund. The overall purpose of the Firminy Equity Fund is to provide a location where wealth can be safely stored and managed; those wishing to forgo the risk of holding certain assets may place them into this fund.

Firminy Capital Sarl is dedicated to safe-guarding the property and investments entrusted to the Firminy Equity Fund, and has even surpassed its legal obligations by conducting a regular financial review.