Does your debt portfolio need pass-through certificates?

Securitization helps reduce default risk on loans by repackaging them into securities. Pass-through certificates (PTCs) are a type of securitization that spreads risk to investors, and some startups are now offering PTCs to individual investors in India. PTCs have become popular in India, with the market experiencing robust growth. PTCs incorporate risk mitigation mechanisms such as minimum retention requirements and over-collateralization. However, there are still risks, including borrower defaults and potential impacts from the financial health of originators or servicers. PTCs have advantages over peer-to-peer lending in terms of diversification, risk mitigants, and ratings. They are complex instruments meant for sophisticated investors.

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