For corporates that have seen their credit rating downgraded as a result of mounting financial pressure or a leveraged buyout (LBO), a trade receivables securitisation offers an excellent alternative source of funding. A trade receivables deal allows corporates to receive AA- or AAA-rated standard finance, although the company’s actual rating may be below that, since this form of debt is rated according to the credit quality of the debtors, and not of the issuer. This higher rated debt can reduce a corporate’s cost of funds by between 100 and 200 basis points.

• Securitisation offers a corporate an attractive cost of funds and reduced interest costs


• The securitisation of trade receivables is a committed-term financing with a soft amortisation profile


• Engaging in a securitisation transaction enables a corporate to diversify their funding sources


• A trade receivables securitisation is a highly flexible funding source that can "breathe" with the business


• The securitisation of trade receivables offers a corporate return on equity (ROE) benefits from lower funding costs thus reducing the working capital investment requirement


• A securitisation transaction may be structured to survive a change of control of the company

Increasingly, private equity sponsors are turning to securitisation in post leverage buyouts (LBO) companies to control both the level of borrowing and to control associated interest costs. Securitisation is also being utilised as a method of providing higher levels of working capital to develop value in buy-out companies. Using the proceeds of a securitisation to push out debt repayment schedules brings a valuable reduction in amortisation pressure, transforming the post-LBO balance sheet of the corporate.

• Raising capital through a trade receivables securitisation, diversifies the sources of funding available


• Engaging in a securitisation transaction will significantly reduce the amount of interest payable on outstanding loans


• The option to securitise receivables will positively impact debt amortisation schedules

Over a number of years, Demica has built solid partnerships and relationships with the world's leading financial institutions. As market leaders in trade receivables, our partners choose to work with us, knowing that our securitisation expertise and ASP technology will accelerate deal execution and meet the stringent time and reporting requirements to satisfy all parties on each transaction.

• Reduces the complexity and administrative burden associated with securitisation transactions


• Deploys flexible, cost effective, ASP technology that integrates with client/seller systems


• Accelerates deal execution through invoice-by-invoice tracking and complete automation of the receivables sales process


• Mitigates risk through automated eligibility testing and selection and reserve/pricing calculations


• Demica's reporting solution and process methodology facilitates the rating agency process

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