How To Securitize Trade Receivables

How To Securitize Trade Receivables

How To Securitize Trade Receivables

You want cheaper capital and repeatable funding against receivables. Securitization does that if you have data discipline, real controls, and enough volume to carry the fixed costs. Here is the straight path from idea to first draw, with actual cost bands, minimum size, and jurisdictions that work.

Outcome: a bankruptcy-remote SPV purchasing your receivables, funded by senior and mezzanine notes, with clear waterfalls, tested triggers, and cash at a lower blended rate than a standard line.

When Securitization Makes Sense

Receivable volume
At least USD 25 to 50 million outstanding on a rolling basis for a private deal. USD 100 million plus if you want a rated term take-out.
Data and controls
Clean aging, performance history, lockbox or account control, and enforceable contracts. No messy side letters.
Buyer mix
Diversified obligors with limits. Single-buyer books can work but expect hard caps and haircuts.
Use of proceeds
Refinance expensive lines, fund growth, or term out seasonal peaks with a warehouse-to-term plan.

Pick the Structure That Fits

Structure Best for Notes
Private SPV warehouse (unrated) USD 25 to 150 million programs, fast launch, bespoke triggers Bank or fund senior with mezz behind. Cheaper than ABL once scaled.
ABCP conduit via a bank Investment grade obligor mix and tight reporting Bank conduit funds senior notes. Lower margin, stricter covenant set.
Rated term ABS USD 100 to 300 million plus, stable pools, public or 144A Rating agencies, bigger legal and auditor stack. Lowest senior cost once live.
Insurance-wrapped private notes Middle market pools seeking a credit uplift Monoline or specialty cover on senior tranche. Watch policy conditions.

What It Costs Upfront

Ranges are typical for first-time sponsors. Larger, repeat issuers can land tighter.

Cost bucket Private warehouse Rated term ABS
Sponsor and issuer counsel USD 150k to 350k USD 400k to 900k
Lender or underwriter counsel USD 100k to 250k USD 300k to 700k
True sale and non consolidation opinions USD 75k to 200k USD 150k to 300k
SPV setup and admin onboarding USD 20k to 60k USD 40k to 120k
Trustee and back-up servicer onboarding USD 40k to 120k USD 75k to 200k
Data tape build and audit procedures USD 25k to 100k USD 75k to 200k
Rating agency initial fees Not needed USD 250k to 600k
Arranger or placement fee 0.75 to 1.50 percent of facility 0.75 to 1.25 percent of issuance

Recurring Costs You Should Budget

Item Typical range Notes
Servicing fee 0.25 to 1.00 percent of outstanding Paid to you if you service, or to a third party
Trustee and SPV admin USD 60k to 180k per year Depends on reporting load and jurisdictions
Audit and tax USD 40k to 120k per year Sponsor plus SPV level
Rating surveillance USD 100k to 250k per year Rated deals only
Liquidity or hedge costs Deal specific If matching currencies or interest resets

Minimum Size That Actually Works

Private warehouse
Recommended starting pool USD 25 to 50 million outstanding, with growth to USD 75 million plus inside 12 months to spread fixed costs.
Rated term ABS
Issue size USD 100 to 300 million plus. Anything smaller rarely clears economics after fees and liquidity requirements.

Jurisdictions That See These Deals Every Week

SPV domicile Why pick it Notes
Ireland Section 110 Mature ABS regime, service provider depth, Euro access Common for EUR deals and bank conduit links
Luxembourg Securitization Vehicle Flexible compartments, strong legal clarity Works for multi-compartment programs
Netherlands Investor familiarity, strong trustees Useful for EU obligor pools
UK Deep ABS bench and service providers GBP or multi-currency programs
USA Delaware ASC 860 opinions and investor base familiarity For US obligor heavy pools
Singapore Asia corridors and bank access Strong for APAC obligors and USD programs
UAE ADGM or DIFC GCC flows, English law framework Helpful for MENA obligor sets
Cayman Neutral SPV for cross-border investor syndicates Common for private programs

Legal and Accounting Building Blocks

Topic What the deal needs
True sale Legal opinions that receivables are sold to the SPV and isolated from your bankruptcy
Accounting IFRS 9 or ASC 860 analysis for derecognition. If not achieved, structure as secured borrowing
Collections Lockbox or account control with daily sweeps into SPV accounts
Waterfall Priority of payments that pays senior first, then mezz, then residual to you
Triggers Early amortization on defaults, dilutions, or collections tests breaching set levels

Step by Step To First Funding

Stage What happens What speeds approval
1) Feasibility Volume check, obligor mix, historical performance, target leverage and pricing Two-year monthly data tape and policies ready to share
2) Term sheet Advance rate, reserves, triggers, waterfall, accounts and reporting Agree simple, objective tests to avoid friction later
3) Legal and ops SPV formed, accounts opened, lockbox live, true sale and tax opinions Get bank KYC and account control templates moving early
4) Closing Purchase agreement signed, first pool cut, funds advanced Run a dry tape and collection test before signing

Data Tape Requirements

  • Monthly cohort performance at least 24 months billed, paid, days past due, write-offs, recoveries, dilutions
  • Obligor master with industry, country, terms, limits, concentrations
  • Policies and procedures credit, billing, collections, disputes
  • Top 20 obligor files contracts, correspondence, dispute logs
  • Reconciliations tie AR subledger to GL and bank statements
If you want a receivables securitization that actually prices and funds, send your last 24 months AR data tape, sample contracts, and target size. We will return a structure choice, costed timeline, and a route to senior and mezz investors.

Start a Receivables Securitization

Share your data tape, obligor map, and target facility size. We will come back with indicative advance rates, fees, and a closing plan.

Talk to the Team

Figures and ranges are indicative and for informational purposes. Any securitization is subject to due diligence, KYC and AML checks, sanctions screening, true sale and tax opinions, and final investor or lender approval. Accounting and tax outcomes depend on your facts and advisors.

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