What is Trade Receivables Securitisation?

What is Trade Receivables Securitisation?

Trade Receivables Securitisation is a long-standing receivables finance tool that connects the working capital finance needs of large corporates with capital markets. In Trade Receivables Securitisation, a receivables purchase agreement is typically signed between a company and a Special Purpose Vehicle (SPV) which in turn will issue securities or notes to investors, the proceeds of which are used to fund the purchase of the receivables.

Investors will typically commit to purchase the notes for up to five years against an advanced rate formula that takes into account dilution and loss history. It is ideal for companies with large numbers of customers and it can aggregate receivables from operating companies across different geographies and business units.

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