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A practical guide to securitisation for Jamaican businesses

For many Jamaican businesses, the main funding options are still bank loans or bonds. 

Securitisation offers another route: the use of predictable future income to raise capital. 

Jamaica has already used this technique at scale. In October 2024, the Government of Jamaica reportedly raised US$480 million by securitising part of the revenue due to it from Norman Manley International Airport. Kingston Airport Revenue Finance Limited issued 12-year notes backed by 52.33 per cent of the relevant airport revenue. Investor demand reportedly reached approximately US$2.3 billion. The private sector has also used similar structures, with growing momentum. 

What is securitisation?

In plain terms, securitisation allows an entity to identify a reliable stream of payments (i.e. receivables), transfer the right to those payments to a special purpose vehicle and use that cash flow to support securities sold to investors. These receivables may come from loans, leases, invoices, subscriptions, utility bills or other payment obligations. 

In a typical securitisation, the business that owns those receivables, the “originator”, sells a pool of the receivables to a separate special purpose vehicle, or SPV. The SPV pays for the receivables by issuing notes or other securities to investors. The receivables, when received, are then used to meet transaction expenses and pay investors interest and principal. The business receives cash up front. The investors receive an investment backed mainly by the performance of the receivables, rather than by the general credit of the originator.

This is the key difference between a conventional corporate bond and a securitisation. With a bond, investors ask whether the issuer can pay from its business as a whole. With a securitisation, they ask whether the specific pool of receivables will perform as expected and whether the legal structure properly protects those cash flows.

Why should Jamaican businesses care?

The main attraction is liquidity. Instead of waiting for receivables to be collected, an originator can receive a substantial portion of their value now. That capital can support new lending, expansion, infrastructure investment, debt refinancing or working capital. Executing a securitisation is not without cost. The transaction brings cash forward, but the originator gives up some amount of future income and pays legal, advisory, administration and occasionally rating costs upfront. It works best where the asset pool is large, the supporting data is reliable, and the funding benefit justifies the complexity.

How the structure works

Although no two transactions are identical, a traditional securitisation generally involves five core stages.

1. The originator selects the assets. The transaction documents should set clear eligibility requirements for the receivables/assets, covering matters such as payment history, remaining term, currency, arrears status, concentration and whether the underlying contracts can be assigned.

2. The receivables are transferred to the SPV. The parties usually intend a “true” sale, meaning that the transfer is “bankruptcy remote” and should still be respected if the originator later becomes insolvent. 

3. The SPV issues securities to investors and uses the proceeds to pay for the receivables. The SPV should be entirely independent of the originator, with limited or no business activities outside of the securitisation, separate records and restrictions on taking on unrelated debt.

4. The transaction sets the payment waterfall. This is the agreed order in which collections are applied, usually starting with taxes and essential expenses, then fees, investors, reserves, and any residual amounts.

5. The assets must be serviced. The originator often continues collecting payments and managing customer relationships. That can be efficient, but it creates risk. Collections must be tracked, transferred promptly and reported accurately, and the documents should provide for a replacement servicer if needed.

Which Jamaican assets may be suitable?

Potential asset classes which could be used in a securitisation in Jamaica include residential and commercial mortgages; motor vehicles, equipment and solar-system loans; credit card and personal-loan receivables; leases; trade and export receivables; insurance premium receivables; utility and telecommunications payments; toll and airport revenues; rent receivables; and certain intellectual-property royalties.

Some assets are easier to securitise than others. For instance, standard-form motor vehicle loans with several years of payment history may be easier to model than a small group of bespoke loans. Mortgage portfolios would likewise be a popular option. Tourism receivables, on the other hand, can earn foreign currency but may be exposed to hurricanes, airlift, travel advisories and global shocks.

The Jamaican legal framework

Jamaica does not have one specific statute that would govern securitisations. A transaction must be built considering several areas of law, including company, contract, property, insolvency, securities, banking, tax, data-protection and consumer-protection law. Early legal analysis is therefore essential. Consideration should also be given to any benefits of using an offshore SPV in a tax-friendly jurisdiction such as Barbados or St. Lucia. 

A true sale must be true in substance

The sale agreement should clearly identify the receivables, the purchase price and the circumstances, if applicable, in which defective assets must be repurchased. As it relates to insolvency risk, investors will need comfort that if the originator becomes insolvent, the transferred receivables will not be treated as assets available to the originator’s general creditors. A defensible purchase price, good faith, proper completion and perfection are therefore critical.

The underlying contracts still matter

The receivables are only as strong as the contracts that created them. Due diligence should be carried out to assess any restrictions on assignments, required consents, set-off rights, cancellation rights and compliance with any applicable legislation. Post-assignment, the SPV should receive the benefit of supporting guarantees, insurance and security, not merely the right to issue invoices. 

Issuing the notes is a regulated securities transaction

Asset-backed notes are securities, falling within the provisions of the Securities Act and under the purview of the Financial Services Commission (“FSC”). All applicable regulatory requirements must be satisfied for the issue in Jamaica. An offer may qualify as an exempt distribution, but exempt does not mean unregulated. The applicable FSC requirements, investor criteria and ongoing obligations must all be complied with.

The Jamaica Stock Exchange’s bond and private-market platforms may also be relevant, depending on the proposed investors, transferability and desired secondary-market access. A licensed securities dealer acting as broker will ordinarily coordinate the offering process.

The parties behind the structure

Securitisation is a team effort. The originator creates or owns the receivables and as mentioned above, often continues to service them. The SPV buys the assets and issues the securities. The arranger/broker designs the transaction, models the cash flows, coordinates due diligence with the assistance of the attorneys and places the notes with investors.

The issuing of the bond may necessitate the appointment of a trustee to act on behalf of the investors and hold the transaction security, where the trustee also acts as collateral agent, paying agent and registrar. The account bank holds collection and reserve accounts. Rating agencies may also be engaged to assess the notes.  The attorneys will prepare the transaction documents and provide legal opinions. This is not an exhaustive list of team members.

What can go wrong?

Customers may repay early, interest rates may move, receivables may be reduced by disputes or set-off. Collections may be delayed. Hurricanes or other shock factors may affect an entire sector at once.

There is also legal and structural risk. The transfer may not be respected as a true sale. A required consent may be missing. A prior secured creditor may have better priority. A protective trigger may operate too late. The rating may be downgraded, and the notes may be harder to sell in a thin secondary market.

For investors, yield and maturity are only the starting point. Investors should understand the asset pool, cash-flow assumptions, credit enhancement, payment waterfall, trigger events, recourse to the originator, servicer strength, trustee powers and enforcement rights. In distress, the protections that matter are usually found in the precise wording of the documents.

Is Jamaica ready for more?

Jamaica has a pool of institutional and high net worth investors, experienced securities dealers, an active exempt-distribution market and growing familiarity with structured finance. As at December 2025, the FSC reported 558 exempt-distribution securities outstanding, including 483 debt issues. Reported outstanding amounts were approximately J$478.1 billion and US$1.113 billion. The airport-revenue transaction also demonstrated that investors will consider well-structured Jamaican cash flows. The constraints the market faces are primarily a matter of scale. Advisory, operating and structuring costs require a high-value asset or receivable pool backed by reliable contracts and clear collection mechanics, for a securitisation to be feasible. 

The bottom line

Securitisation can help Jamaican businesses reduce their reliance on traditional lending and convert predictable long-term cash flows into capital for housing, consumer finance, renewable energy, infrastructure and business expansion. Its success, however, depends on the quality of the underlying assets and the strength of the transaction. Reliable receivables, genuine legal separation, sound servicing, full disclosure and a clear payment structure are what make a securitisation credible and attractive to investors.

Jamaica has already shown that future revenue can raise meaningful capital today. Done properly, securitisation can become an even more important part of Jamaica’s financing toolkit—mobilising capital for private-sector growth and national development.

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Simone Bowie Jones is a Partner in the Commercial Department at Myers, Fletcher & Gordon. She may be contacted via [email protected] or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.