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Securitization, Structured Finance, and Capital Markets, 2004

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Securitization, Structured Finance, and Capital Markets provides an introduction to securitization as a method of financing. It is suitable for an independent course or seminar in securitization and structured finance, and may also be used as supplementary reading or as advanced examples in courses in bankruptcy, secured transactions, trusts, corporations, securities regulation, corporate finance, tax, banking, or accounting.

The book is organized by substantive legal areas. The first chapter provides an overview of securitization and is a terrific starting point for anyone trying to learn more about this $6 trillion industry where assets as diverse as car loans, credit card debt, student loans, home mortgages, and commercial mortgages are securitized to provide the loan originator with a source of capital at lower cost than might otherwise be available. The first chapter introduces securitization through a detailed discussion of an actual securitization of loans made to purchasers of Hondas. The Honda deal is followed as an example throughout the subsequent chapters and numerous documents from the deal are reprinted in the book. Students should benefit from the concrete example and the opportunity to examine the actual legal documents used to implement this type of financing transaction.

Subsequent chapters of the book examine Article 9 of the UCC, the Bankruptcy Code, accounting issues, tax and other considerations, securities laws, and the Investment Company Act. There is a separate chapter focused on special concerns of banks securitizing loans, a chapter on international and cross-border issues in securitization, and a concluding chapter exploring the academic debate relating to the efficiency of securitization. Each chapter of the book contains discussion questions, and these questions are thoroughly addressed in the Teacher's Manual (available only to professors).

Professors and adjunct professors may request complimentary examination copies of LexisNexis law school publications to consider for class adoption or recommendation. Please identify the book(s) you wish to receive, provide your institutional contact information, and submit your request here.

Table of Contents

SUMMARY TABLE OF CONTENTS

CHAPTER 1. AN OVERVIEW OF SECURITIZATION . . . 1
101 Introduction . . . 1
102 Limitations on Raising Money the Old-Fashioned Way . . . 3
103 The Mechanics of a Standard Securitization . . . 6
104 Conclusion and Questions . . . 16

CHAPTER 2. ARTICLE 9 OF THE UCC: TRANSFER OF INTANGIBLES . . . 19
201 Introduction . . . 19
202 The Concept of a "Transfer" . . . 20
203 Transfers in the Form of the Creation of Security Interests Under Article 9 . . . 30

CHAPTER 3. BANKRUPTCY AND SECURITIZATION . . . 37
301 General Overview of Bankruptcy . . . 37
302 The Potential Conflicts Between Securitization and Bankruptcy . . . 45
303 The Major Issues: Bankruptcy Remote Entities, "True Sales," Fraudulent Transfers and Substantive Consolidation . . . 54

CHAPTER 4. ACCOUNTING ISSUES . . . 87
401 Introduction . . . 87
402 Transfer of Financial Assets by Originator Treated as a Sale . . . 87
403 Accounting Consolidation . . . 93
404 Disclosure on Originator's Financial Statements of Off-Balance Sheet Items . . . 98
405 The Honda Securitization . . . 100

CHAPTER 5. TAX ISSUES AND STRUCTURING CONSIDERATIONS . . . 103
501 The Basic Tax Issues in a Standard Securitization . . . 103
502 Securitization Structures and Types of Issuers . . . 112

CHAPTER 6 SECURITIES LAWS AND THE INVESTMENT COMPANY ACT . . . 129
601 Investment Company Act of 1940 . . . 129
602 Securities Act of 1933 and Securities Exchange Act of 1934 . . . 139

CHAPTER 7 BANKS AND SECURITIZATION . . . 145
701 Why Banks Securitize Assets . . . 145
702 The Statutory Authority for Bank Asset Securitization . . . 148
703 Insolvency of Bank Originator . . . 151
704 Bank Investment in Securities Issued in a Securitization . . . 155
705 Capital Calculation . . . 155

CHAPTER 8 INTERNATIONAL AND CROSS-BORDER ISSUES IN SECURITIZATION . . . 171
801 Introduction . . . 171
802 Differences in Foreign Markets . . . 171
803 UNCITRAL's Receivables Convention . . . 182
804 Exchange Rate Risk and Other Risks Related to Foreign Currency Exchange . . . 196
805 Tax Issues . . . 197
806 Rating Agency Issues . . . 201

CHAPTER 9 THE ECONOMICS OF SECURITIZATION . . . 203
901 The Debate . . . 203

APPENDICES
App 1. UCC-1, American Honda Finance Corporation . . . 241
App 2. UCC-1, American Honda Receivables Corporation . . . 245
App 3. UCC-1, Honda Auto Receivables 2003-1 Owner Trust. . . 251
App 4. Prospectus . . . 257
App 5. Prospectus Supplement . . . 357
App 6. Form 8-K . . . 439
App 7. Underwriting Agreement . . . 445
App 8. Indenture . . . 475
App 9. Amended and Restated Trust Agreement . . . 555
App 10. Sale and Servicing Agreement . . . 609
App 11. Receivables Purchase Agreement . . . 681
App 12. Administration Agreement . . . 701

Table of Cases . . . TC-1
Table of Statutes . . . TS-1
Index . . . I-1