Securities that are serviced primarily by the cash flow of a pool of receivables or other financial assets into cash within a finite period of time. Asset-backed securities include securities that represent an ownership interest in a pool of discrete assets or certificates of interest or participation in these assets, provided the assets are not generated or originated between the ISSUER of the securities and its AFFILIATES; and securities that are secured by one or more assets or certificates of interest or participation in which the terms of the securities provide for payments of principal and interest, if any, in relation to payments or reasonable projections of payments on the assets, or certificates of interest/participation. Rule 903(c)(4)(ii)(B).
Debt securities which depend on a pool of underlying receivables. In ART these refer to insurance-linked securities.
Securities that provide returns which are based on the payments from a portfolio of underlying securities.
A type of bond backed by loans made primarily by banks and other financial institutions to consumers. Examples include credit card loans, car loans, and other similar types of loans.
A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards - these issues are very similar to mortgage-backed securities.
Same as Debentures. Bonds or notes backed by specific company assets. Similar to a mortgage.
Asset-backed securities (ABS) are financial instruments generally issued by a special-purpose company (SPC) to which a firm has transferred assets. Revenue from their sale is usually used to pay principal and interest on outstanding debt. Companies can procure funds through asset-backed securities regardless of their credit standing, allowing firms that cannot issue corporate bonds due to a poor credit rating to raise funds in the capital market. Returns on the securities are usually higher than those of straight bonds with the same credit rating. Investors having difficulty managing their capital often regard asset-backed securities as an attractive investment. The market for asset-backed securities has expanded rapidly because they are extremely appealing amid the current low stock prices and interest rates.
Debt securities that are created when financial assets are pooled together and claims to that pool are sold in the market. The most common types of securitized assets are mortgages, credit card receivables, automobile loans, student loans, and equipment leases.
A collection of similar receivables (receivables portfolio). The sale of ABS serves to create liquidity. Receivables with maturities of between 30-90 days are the rule. ABS is a modern form of corporate financing and can be viewed as a substitute for the traditional loan. This form of financing not only increases a company's liquidity, generally at more favorable financing costs, its off-balance sheet status as well as the diversification of funds are also decisive aspects. To collateralize the securitized loans, financing instruments, which are described as securities backed by assets, are constructed.
Special form of securitization of claims for payment in the form of tradable securities. These securities are created by the repackaging of certain financial assets.
A bond backed by loans or account receivables originated by banks, credit card companies or other credit providers.
A type of security in which certain assets or accounts receivable serve as the primary source for the payment of principal and interest on the security. Asset-backed securities may be issued by banks or by other entities such as credit card companies. Mortgage-related securities are one type of asset-backed security.
Bonds that represent pools of loans of similar types, duration and interest rates. Almost any loan with regular repayments of principal and interest can be securitized, from auto loans and equipment leases to credit card receivables and mortgages.
Securities underwritten by brokerage firms who sell them to investors. The securities (bonds or notes) are backed by loan paper or accounts receivable of the issuer. See: Accounts Receivable
A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, rather than real estate.
Securities backed by assets that are not mortgage loans. Examples include assets backed by automobile loans and credit card receivables.
Securities backed by loans or accounts receivable. For example, an asset-backed bond is created when a securities firm bundles some type of debt, like car loans, and sells investors the right to receive the payments that consumers make on those loans.
These are debt instruments collateralized by a pool of assets such as automobile loans or equipment leases.
The investor buys an interest in a pool of loans such as credit card receivables, car loans, leases etc. As the loans are paid off by the borrowers, the investors in the ABS receive payments of interest and principle over time. These securities help make credit available to more people, by giving lenders access to large pools of capital which help them manager their risk. ABSs normally carry some form of credit enhancement such as bond insurance to make them more attractive to investors. Alternatively the investors can buy credit default swaps to protect against default.