Asset-backed securities, called ABS, are bonds or notes backed by financial assets. The loan originators are commonly referred to as the issuers of ABS, but in fact they are the sponsors, not the direct issuers, of these securities. The SPV, which is usually a corporation, then sells them to a trust. The trust repackages the loans as interest-bearing securities and actually issues them.
ABS constitute a relatively new but fast-growing segment of the debt market.
This booklet primarily addresses publicly issued ABS, although the growing private-issue ABS market is briefly mentioned. Securities backed by first mortgages, although the most common ABS, are considered a separate investment category adn are therefore not included in this guide. Certain types of financial institutions, such as banks, may sell their loans directly to a trust that issues ABS, since the intermediate sale to an SPV is not needed to achieve bankruptcy remotenes. All reproduction and other rights reserved. The printed version of this Guide is available in bulk from The Bond Market Association's Publications Department .