ABS

ABS or asset-backed securities are bonds or notes created via securitisation that are backed by a range of assets or receivables. Generically, all securitisations can be labelled ABS and it is often used as a coverall term; in some cases in SCI, ABS will be used in this manner. However, in many cases, ABS are taken to exclude mortgage-backed securities (MBS) and structured credit instruments, such as CDOs. If so, then asset-backed securities or ABS are taken to include consumer ABS, such as credit card securitisations, auto loan or dealer floorplan ABS, student loan securitisations, project finance/infrastructure securitisations and equipment leasing-based transactions. ABS originators are typically loan issuers, such as banks, credit card companies, auto finance and consumer finance firms, but can be any institution that generates regular, quantifiable future income flows (or cashflows), which includes governments. To create asset-backed securities, institutions sell pools of their loans to a special-purpose vehicle, or SPV, which then sells the loans to a trust. The trust then repackages the loans as interest-bearing securities and issues them. This true sale of the loans to the SPV ensures that the ABS is treated as being bankruptcy-remote from the originator.


  • Moratoria mulled

    Payment holidays set to test CRT provisions

    Portfolios referencing loans subject to payment holidays may create a new sub-asset class within the...

    News Analysis    21 May 2020
  • SRTs eyed

    Pension funds target risk transfer

    Pension funds are targeting capital relief trade opportunities as the coronavirus crisis renders pri...

    News Analysis    21 May 2020
  • TALF subscription date announced

    Sector developments and company hires

    TALF subscription date announced The New York Fed has scheduled the first TALF ABS loan...

    Market moves    20 May 2020
  • Sponsor support

    Credit card ABS fallout to be contained

    Rising unemployment and constrained household expenditure, due to coronavirus stress, is likely to n...

    News Analysis    20 May 2020
  • Covid-19 relief initiative launched

    Sector developments and company hires

    Covid-19 relief initiative launched Community Capital Management has launched an initiative to in...

    Market moves    19 May 2020
  • SME CLO, SRT PD adjustments mooted

    Sector developments and company hires

    SME CLO, SRT PD adjustments mooted DBRS Morningstar is considering additional adjustments to refl...

    Market moves    18 May 2020
  • SCI Start the Week - 18 May

    A review of securitisation activity over the past seven days

    Last week's stories Auto ABS boost European ABS market update Drafting issues The potential...

    News    18 May 2020
  • Tortuous TALF 2.0

    Markets question TALF usage

    The Federal Reserve this Tuesday (May 12) published more details about the terms of its $100bn new e...

    News Analysis    15 May 2020
  • Conflict of interest charge settled

    Sector developments and company hires

    Conflict of interest charge settled The US SEC has charged Morningstar Credit Ratings for violating...

    Market moves    15 May 2020
  • Waivers required

    WBS covenant breaches eyed

    The probability of covenant breaches within UK whole business securitisations has increased, due to...

    News    15 May 2020
  • Unknown unknowns

    Covid-19 modelling challenges persist

    Banks are running simulations in an effort to address the credit risk modelling challenges of the co...

    News Analysis    15 May 2020
  • SRTs unlocked

    BMO launches capital relief trade

    Bank of Montreal has finalised a US$132m five-year financial guarantee dubbed Manitoulin Muskoka Ser...

    News    15 May 2020
  • Auto ABS boost

    European ABS market update

    Yesterday’s print of BMW Bank’s latest auto loan ABS marks a significant step in...

    Market Reports    15 May 2020
  • Questionable idea?

    Central bad bank proposal raises concerns

    The ECB is exploring the idea of a bad bank to relieve European bank balance sheets following expect...

    News Analysis    14 May 2020
  • Liquidity support

    Amendments mitigate forbearance impact

    A number of UK securitisation issuers are enhancing their deals to mitigate the negative impact on r...

    News Analysis    14 May 2020
  • Portfolio resilience

    Technology-driven investment gaining traction

    Pagaya has expanded to the US West Coast, beefing up its origination group. At the same time, the fi...

    News    14 May 2020
  • TALF CLO rules clarified

    Sector developments and company hires

    TALF CLO rules clarified The US Federal Reserve has clarified its CLO eligibility rules for TALF. I...

    Market moves    13 May 2020
  • Positive outlook

    Survey indicates distressed debt pick-up

    A new survey of private markets suggests that a pick-up in distressed debt activity is likely over t...

    News    13 May 2020
  • Risk transfer round-up - 13 May

    CRT sector developments and deal news

    Bank of Montreal is rumoured to be prepping a corporate loan capital relief trade for 3Q20. The lend...

    News    13 May 2020
  • SFSF investments disclosed

    Sector developments and company hires

    SFSF investments disclosed The AOFM has disclosed the recent investments it has made under the Stru...

    Market moves    12 May 2020
  • Residual value buffer provided

    Sector developments and company hires

    Residual value buffer provided Volkswagen Financial Services UK will calculate a collateral resid...

    Market moves    11 May 2020