Buy Now, Pay Later Securitization: The Rise of 'Burrito Bonds'
2025-05-11
This article explores the securitization of Buy Now, Pay Later (BNPL) loans, a novel approach where small loans are bundled and sold to investors, often humorously referred to as 'burrito bonds'. The author argues this innovation improves credit market efficiency by unbundling risk, allowing granular pricing, and enabling more efficient capital allocation. Despite skepticism, the author posits it's a win-win, leading to lower borrowing costs and a more complete market. This process, the article contends, makes credit cheaper and capital allocation more effective, potentially even boosting economic resilience.
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Tech
Securitization