The premier weekly on asset and mortgage-backed securitization
www.structuredfinancenews.com
Search our Glossary of Credit Terms Global News and Data Provider
www.creditflux.com
Flexible financing and seasonal solutions for growing companies.
www.gerberfinance.com
Introduction to legal and regulatory issues in the US asset-backed securities markets.
www.law.duke.edu
Introduction to asset-backed securities, the cross-border market for such securities and the legal structure guiding the structuring of them.
www.law.duke.edu
Introductory piece to monoline insurers that guarantee financial performance of asset-backed securities.
www.securitization.net
Securitization of equipment and auto leases is covered in this report by partners at Mayer, Brown & Platt.
www.securitization.net
Lecture by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Paper on why industrial firms use the asset-backed securities market to finance operations when the option of unsecured debt issuance is generally available.
www.stern.nyu.edu
Case study by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Case study by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
A spreadsheet chart of the costs and benefits for different parties in a structured-asset securitization.
www.stern.nyu.edu
A spreadsheet that details a typical asset-backed structure.
www.stern.nyu.edu
Lecture by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Paper that serves as an introduction to securitization.
www.stern.nyu.edu
Lecture by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Lecture by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Lecture by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Lecture by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Information on rating sovereign securitization.
www.stern.nyu.edu
Information on asset-backed securities in Germany.
www.stern.nyu.edu
Lecture on asset-backed securities by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
Lecture by professor Ian Giddy of New York University's Stern School of Business.
www.stern.nyu.edu
The premier weekly on asset and mortgage-backed securitization
www.structuredfinancenews.com
Search our Glossary of Credit Terms Global News and Data Provider
www.creditflux.com
Flexible financing and seasonal solutions for growing companies.
www.gerberfinance.com
The origin of asset-backed securities traces back to 1985 when the Sperry Leasing Finance Corporation issued securities with backing from its computer equipment leases. From there Sperry sold its right to these asset-backed securities to a special purpose vehicle (trust, corporation or partnership) and investor, then purchased interests in the special purpose vehicle through an underwriter. This was the birth of a trillion dollar industry.
The pricing of asset-backed securities has auto loans, credit card debt, home equity loans, student loans and entertainment royalties as the basis for the securities. Credit card debt, home equity loans and auto loans make up about 60% of all asset-backed securities. The risk of the securities is usually relatively modest due to diversification, but that will depend on the financial viability of the underlying assets. If a business wants to invest in or issue asset-backed securities, there are a number of items to consider before proceeding:
1. Identify the uses of asset-backed securities.
2. Understand the structuring and pricing of asset-backed securities.
3. Know the risk and rewards when purchasing asset-backed securities.
Action Steps
The best contacts and resources to help you get it done
Evaluate the basic uses through an introduction to asset backed securities
Unlike other investments such as stocks, asset-backed securities require a better understanding of the process by which companies issue these investment vehicles. With stocks, a person understands that they are buying shares of a given company. However, with asset-back securities, the underlying security is debt from myriad entities.
I recommend: Examine the article "Asset Backed Securities: a practical guide for investors" for a better understanding of the basics of these investments. Investinginbonds.com also has a series of articles on asset-backed securities information and asset-backed securities basics.
Analyze asset-backed securities pricing and structure
The pricing of asset-backed securities is, like stocks, determined by the markets in which they trade. The credit rating service Moody's issues a credit rating on each asset backed security, and this rating helps determine the market value for the asset-backed security. The structure of these financial instruments are similar but can vary some with each company that issues them.
I recommend: Register with the Moody's to view the rating and pricing information on asset-backed securities. Examine this chart from ABSresearch.com to determine the basic structure of an asset-backed security.
Seek professional advice on asset-backed securities
Because these investment vehicles are relatively new, an investor must be diligent in his or her research before investing in asset-backed securities. After all, the underlying security is debt, and in a weak economy this debt can default, leaving an asset-backed security severely devalued.
I recommend: Consult a representative at Chicago Partners or Structured Finance Advisors, which offer asset-backed securities consulting services. Attend ABS securities classes from AFS Seminars to gain a better understanding of these investment vehicles.
Tips & Tactics
Helpful advice for making the most of this Guide
- • Before investing in asset-backed securities -- or any securities -- no matter how safe they may appear, you should always consult an investment professional prior to the purchase for guidance and advice.


