Securitization: 7 Things You Need to Know!
One of the fundamental parts of a project is the financial one, where alignment with market conditions is fundamental to profitability.
Securitization, rather than being a financial strategy, represents an accessible solution that enables the rise of the national economy. In addition, it is also a way to democratize and support various types of businesses.
That's why we highlight 7 points about this very important practice. Check it out:
1 - After all, securitization or securities?
Originated from the English term”securitization”, the word securitization refers to securities. It could simply be called securitization in Brazil, which is why this variation became common: securitization. Securi it's just another version of the same term, dealing with the same subject.
In addition, it's no wonder that the name refers to security. Who never had an idea thought about getting it off the ground but had no financial resources?
Securitization promotes independence of your business, minimizing debts or possible large loans.
On a journey through the time tunnel, going back to the 70s, we found references from the financial sector that defined this process as”the practice of structuring and selling tradable investments, so that they are distributed among several investors, a risk that would normally be absorbed by a single creditor” - as shown by Uqbar Finance Dictionary.
2 - Understanding securitization
In short, let's get to the point: companies aim for growth by raising funds, while investors seek better profitability.
Therefore, we say that the marriage between securitization and Capital markets allows more money in circulation and provides expansion of the country's economic fund.
Investors ensure that creditors receive their debts in advance, allowing for the rapid development of these companies, since it would take them months to receive these amounts, considering possible defaults.
And what happens when a company's growth is constant? New opportunities appear!
Securitization is the guarantee that this economic harmony continues in accordance with independence, allowing long-term planning and reducing risks.
3 - Who is who?
Okay, now that we've talked about the impact and role of securitization in the market, let's remember who is who in this story?
4 - Advantages of Securitization
For companies seeking growth, raising these resources allows projects to be feasible more quickly.
In practice, there is no need to wait for accounts receivable to be in cash. It works as a kind of “debt insurance”, because even receiving the amount below the total due, the anticipation of these resources can provide income and market gain.
Investors, in turn, study the best rates of return: they are the ones who will receive the difference over the amount of the debt (including interest at the time the bond is paid off).
This transaction is carried out by financial market intermediaries, such as banks and traditional institutions - but it has also been gaining popularity among Fintechs.
So these are the 3 main advantages:
1st - Anticipates receipts and enables growth projects;
2nd - Reduces impacts in cases of possible default;
3rd - It offers security to creditors and convenience to investors.
5 - Assets that can be negotiable securities
It is natural that after all these details, the following question comes up: which securities can be backed?
In fact, securitization is increasingly flexible, reducing bureaucracy even on dense issues such as the economy itself. It is worth highlighting the trading of best-known assets, namely:
- Checks;
- Financing;
- Installments;
- Rentals;
- Loan agreements.
6 - Securities Transactions
Some elements make up the contractual parameters of certain Securities transactions. Among them we can highlight the following:
Real Estate Receivables Certificate (CRI): security issued by a securitizer, which makes the debt backed up for specific real estate financing.
Agribusiness Receivables Certificate (CRA): processes involving cooperatives and rural producers. It is also a fixed income security issued by a securitizer and allows it to be a negotiable debt.
Debentures: debentures, in turn, are issued by investors seeking long-term returns. They acquire the bonds and then recover the investment with the increased interest.
The Credit Rights Fund (FIDC): consists of planning with more than one investor - a group has common interests and ends up pooling its own resources into a single security.
7 - The current scenario of securitizing companies
It's been very delicate to talk about long-term planning, right?
But the pandemic is a reality that, however impactful, can bring new perspectives on the market.
This is precisely one of the most discussed factors globally: the possibility of resilience in the face of challenges and times of uncertainty. According to an analysis by True Securitizadora, securitization in the pandemic scenario also had its challenges and reinventions. Check out the following excerpt:
“Data reinvention and analysis - companies had to adapt to the 'new normal', adapting operations to the home office model (in the case of businesses that had this possibility), and improving digital governance, communication and sales channels. Anticipating the economic effects of extended forties, many companies went ahead to renegotiate contracts and cut expenses.”
In this way, the securitization business moves on to better possibilities: reviewing investment gaps, ensuring security for creditors and convenience for investors.
These revisions tend to further potentiate the market: securitizers describe a moment of optimism and start to adopt innovative technologies in their solutions.
Securitization at Clicksign
In the language of the financial market, there is a lot of talk about CCB Digital. The Bank Credit Bill is a security issued by an individual or legal entity to a financial institution. It is a promise to pay in cash resulting from a credit transaction.
CCBs can be transferred in the form of an endorsement to another creditor, even if it is not a financial institution.
In addition, such titles can be used in different modalities of credit operations, such as payroll, CDC, or overdraft, for example. They can also be signed electronically, maintaining legal validity in accordance with Provisional Measure 2,200-2.
Clicksign has a solution that allows the generation, guarantees the endorsement and signature of CCBs electronically.
Thus, it provides more agility in production, whether through electronic or digital signatures, greater security and more convenience for those who use Bank Credit Cards in digital mode.
Very pleased, we are Clicksign!
A pioneering electronic document signature company in Brazil, our mission is to simplify processes and bring digital transformation to everyone.
We combine technology, speed and security to guarantee legal validity to all documents signed by the platform.
Our solution allows the electronic signature of any device with access to a Digital Certificate or the internet, in addition to automation and intuitive integration, discovering how creative technology can further enhance modernity.
Clicksign is the ideal solution to accelerate the growth of your business! If you want to know more about how Online Document Signing can revolutionize your company's processes, take a free test and see how it is possible to make a subscription, with legal validity, in less than 1 minute. Try it, no credit card required!
