In our Bramshill Insights article from October 2023, we generally discussed the underlying assets that secure some of the Securitized Products in which we invest. Specifically, such investments that are secured by U.S. residential and commercial real estate. In this piece, we will focus on the structure of the Securitized Products and spend more time on the characteristics of some of the securities in which we invest, in relation to the underlying assets by which they are secured. Firstly, we will revisit the definition of a securitization. According to Investopedia, “Securitization pools assets and repackages them into interest-bearing securities. An issuer designs a marketable financial instrument by merging financial assets, commonly mortgage loans or consumer or commercial debt. Investors that purchase these securities receive the principal and interest payments of the underlying assets.” The simple illustration below shows how an originator/seller/sponsor can transfer a pool of assets into a Special Purpose Vehicle (“SPV”). SPV’s are legally formed trusts that are bankruptcy remote and used to create a securitization. Once the assets have been deposited in the SPV, the SPV can simultaneously issue investable securities and then pass through the proceeds received from selling the securities back to the originator/seller/sponsor via the SPV.