Securitization

Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs). Investors are repaid from the principal and interest cash flows collected from the underlying debt and redistributed through the capital structure of the new financing. Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).

Critics have suggested that the complexity inherent in securitization can limit investors' ability to monitor risk, and that competitive securitization markets with multiple securitizers may be particularly prone to sharp declines in underwriting standards. Private, competitive mortgage securitization played an important role in the U.S. subprime mortgage crisis.

Securitization (international relations)

Securitization in international relations (Copenhagen School) is the process of state actors transforming subjects into matters of 'security': an extreme version of politicization that enables extraordinary means to be used in the name of security.

Issues that become securitized do not necessarily represent issues that are essential to the objective survival of a state, but rather represent issues where someone was successful in constructing an issue into an existential problem.

Securitization theorists assert that successfully securitized subjects receive disproportionate amounts of attention and resources compared to unsuccessfully securitized subjects causing more human damage. A common example used by theorists is how terrorism is a top priority in security discussions, even though people are much more likely to be killed by automobiles or preventable diseases than from terrorism.

Securitization studies aims to understand "who securitizes (Securitizing actor), on what issues (threats), for whom (referent object), why, with what results, and not least, under what conditions."