What is the role of lease securitization in leasing?

Lease securitization plays a critical role in the leasing industry by converting lease payments into securities for financing. This process allows leasing companies to bundle a portfolio of leases and sell them as a security to investors. When these leases are securitized, the lease payments made by the lessees are used to pay returns to the investors who purchase the securities, thus providing a new and efficient source of capital for the lessor.

By converting lease payments into securities, leasing companies can access liquidity that might not be available if they were relying solely on traditional financing methods. This access to capital can enhance cash flow and provide the funds necessary for further leasing operations and expansion. The process also allows investors to diversify their portfolios with lease-backed securities, which can be appealing due to their relatively stable cash flow profile.

The other options, such as creating more stringent leasing guidelines or increasing leasing rates, do not directly relate to the primary function of lease securitization. This process is specifically focused on transforming lease payments into financial instruments for funding purposes rather than policy regulation or pricing strategies.