For example - for every 100 airmiles that , say only 80 are redeemed. But since you are short of cash, you decide to trade your liability for 75cts on the dollar, and in this way you strengthen your balance sheet - you remove $1 dollar of debt for 75cts payment,

The buyer, is betting that he can reduce that 80% to below 75%, or alternatively can push back the payout so that the discounted value is less than the face value

Then lets say the buyer also picks up Lufthansa Miles'n more, Emirates Skymiles, Delta whatever, and then bundles them all into a package, which he splits four ways into four separate securities, each of which he sells on the market.

And what you have is a classic derivatives market.