Islamic Securitisation Showing Upward Trend

KUALA LUMPUR-Islamic securitisation, which is well-received in Malaysia, is showing an upward trend, said Ng Meng Kwai, a partner at Deloitte KassimChan partner.

"The trend is growing as we have good assets that can be securitised," he told a media briefing here today.

Ng said securitisation was a method of funding receivables such as mortgage debts, leases, loans or credit card balances through creating freely tradeable securities backed by the assets.

He said firms considered securitisation for many reasons, principally to raise funds when other forms of finance were more expensive and to reduce credit exposure to particular asset classes.

"Securitisation is a flexible tool that can be adapted to the assets available. There is a growing interest in Islamic securitisation in Malaysia. Two-thirds of the sukuk in the world are issued here.

"Islamic financing actually ties up well with securitisation because it is a process to securitise assets. Islamic finance talks about financing and creating assets. The only thing that we cannot securitise in Islamic finance is debt," he said.

According to Ng, the most common types of securitised assets were residential mortgages, commercial and multi-family mortgages, home equity loans, manufactured housing loans, automobile loans, student loans, credit card receivables, equipment leases, high-yield bonds, bank loans, franchise loans and music royalties.