asset backed securities

Asset-Backed Securities

A form of securities issued based on tangible and intangible assets held by companies or banks, such as real estate, accounts receivable, marketable securities, mortgage bonds, and other property rights. It is a series of actions to increase the liquidity of the underlying assets by issuing and distributing securities backed by assets that are relatively illiquid but have property value. In other words, it is a collective term for securities issued based on cash flows generated from specific assets.

In the process of structuring, various credit enhancement measures may be applied to improve the principal and interest payment capacity of the securitized securities.

• Types of ABS
  • Collateralized Debt Obligation - securitizes debt
    • Mortgage-Backed Securities - securitizes Mortgage Loan (CDO is broader in that it securitizes debt)
  • Collateralized Bond Obligation - securitizes bonds
  • Collateralized Loan Obligation - securitizes loans

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Topics: Securities,SPC
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Category: Wiki/Economy