By Udeme Ekwere

Asset securitisation is one of the options that should be considered as a means of deepening activities in the Nigerian capital market, an investment banker has said.

Specifically, the Managing Director, Goldbanc Management Associates Limited, Mr. Olu Abayomi-Sanya, said that the option would work well to grow vital sectors of the economy.

Asset Securitisation involves the transfer of an asset or a pool of assets, directly or indirectly, by the owner of the assets to a special purpose vehicle which is funded through an issue of debt securities or notes backed by the cash flows generated by the assets.

The process has been a global financing tool embraced by countries such as Mexico; Brazil; United States; Canada, United Kingdom, France; Australia; Hong Kong; the Netherlands; Japan, Germany, Singapore sincethe early 80s.

.Abayomi-Sanya added in a statement that asset securitisation was imperative for the raising of funds that were needed to fund the growth of vital sectors of the Nigerian economy such as housing and other infrastructure.

He said, “Asset securitisation offers a number of advantages to originators, the investors and to the financial system of the country.

From the originator’s perspective, securitisation improves the liquidity position by replacing receivables by cash.

“It removes assets from the seller’s balance sheet, thus liberating capital for other uses, which leads to restructuring of the balance sheet by reducing large exposures or sectoral concentration.”

The investment banker noted that the Nigerian capital market had not been maximally explored to play a major role in making funds available for housing and urban development in Nigeria.

Abayomi-Sanya said, “The challenge, therefore, is to render a housing financing system that will be able to deliver a robust housing finance system. Hence, there is need to link the housing sector to the capital market by converting or securitising mortgage loans that would be traded in by loan originators through the secondary mortgage market.

“This way, more funds are created and more potential homeowners will be able to access funds to build or buy their own homes. Furthermore, pressure will be lifted off the banking sector in terms of the myriad of investments and businesses it may have to finance.”

He therefore disclosed that in order to unlock the huge potential in the capital market through asset securitisation, the company would be organising a one-day seminar to sensitise the stakeholders to the various forms of asset securitisation in particular and how to use the Nigerian capital market to fund the housing needs of the country.

Abayomi-Sanya said the seminar was targeted at fund managers, issuing houses, regulators and government agencies in the housing and mortgage industry and operators in the capital market among others.

Source: Punch