Asset Backed Securities

Ope Agbaje, the ABS analyst at CSAM, goes on to explain that there are a number of important advantages for investors ..... asset backed securities.

Firstly, they gain exposure to a liquid, fixed income investment in a diversified pool of assets, such as auto loans, which make ..... alternative to a corporate bond or other fixed income investment.

In some cases ..... assets, or assets which investors would not ordinarily have access to, such as loans to small and medium enterprises, make up the pool of assets.

However, unlike unsecured bonds, which are fully dependent on the operating, payment ability and ultimately bankruptcy risk of a company, asset backed securities to various degrees tend to be ..... (fully or partly) from those risks.

Typically, they are legally separated from the originator and rely entirely on the performance of the ring-fenced assets, transferred and ..... as bond collateral.

Simply put, the investor buying the securities is not ..... to the credit risk associated with originator of the assets and, thus, ABS bonds represent one of the more secure forms of fixed income securities from a credit quality standpoint.

A number of ABS issues also benefit from external protection in the form of insurance, such as a credit enhancement provider that ensures the quality of the issue, as well as a liquidity provider that covers certain cashflow ......

A further benefit for the investor is that the risk associated with consumer credits, such as credit cards and home loans, can be more easily calculated using advanced quantitative techniques, without the same level of ..... often associated with other fixed income debt such as corporate bonds.

This is because a statistical approach can be more relevant for some asset back bonds that have a ..... underlying collateral consisting of thousands of loans.

While ABS bonds have long been a key component of many fixed income strategies, the search for new sources of ..... have led many investors to the ABS market.