Loan and bond obligations should be securitised to help raise funds for small-and medium-sized enterprises (SMEs), Japanese financial experts said at the 21st annual meeting of the Asian Bankers Association (ABA) on 5 and 6 November in Vietnam's Hanoi capital.
Experts from the Tokyo Metropolitan Government introduced collateralised loan/bond obligations (CLO/CBO) as the two instruments that should be used to raise funds for SMEs
CLO is a way of fund raising from the capital market through securitisation of a loan pool to investors, they said.
A bank extends loans to SMEs, then bundles them into a pool and transfers them to the Cayman Islands-based Special Purpose Co. (SPC), which will issue securities backed by the loans to investors, they said.
In that way, investors can provide funds for SMEs through SPC and the bank.
Meanwhile, CBO is a way of fund raising through securitisation of a bond pool to investors, they said.
