You are a finance employee at a financial institution, specializing in originating auto loans in a country where auto loans have only been available for 2 years. Your group has just been informed that a close competitor has securitized $150 million in auto loans through an investment bank.
- Your boss wants to understand why the competitor did this. Explain.
- He also wants to understand the potential benefits for the following:
- the issuer
- the investors buying the ABS
- the individual borrowers seeking auto loans
- He also wants to know the likely impact to the auto loan market in this country if a large, liquid ABS market emerges over the next few years.