Securitization: A New Capital Market Instrument Emerges in Georgia

"Securitization will introduce a new instrument to the capital market, allowing interested investors to participate," stated Levan Tsutsunava, Managing Partner of Alpha Capital Advisor, on the "Business Partner Peak Hour" program.

Tsutsunava explained that this instrument involves the monetization of future cash flows. "Companies with consistent cash flow can securitize these flows and issue bonds in the market. This is a method for them to fund their growth," he said.

Discussing the potential business interest, Tsutsunava noted that banks find this product particularly appealing. "They can securitize mortgage loans, thereby increasing liquidity and freeing up capital to expand their mortgage loan portfolios," he observed.

The state plays a pivotal role in introducing and operationalizing this law, aiming to encourage businesses to utilize this financial product. International partners are also collaboratively involved in the law's implementation, with expectations that they will show investment interest in this product.

In terms of international experience, Tsutsunava highlighted that securitization is widely popular and in demand. "In the USA, there are government entities supporting this product's market entry. Many American consumers have been able to purchase homes through securitization. This product is also quite prevalent in European countries," he elaborated.

Georgia is currently working on securitization reform, supported by USAID's Economic Governance Program. The reform aims to enhance financing availability in the country and to develop various financial tools for businesses beyond commercial banks.