Asset-backed security

Asset Backed Securities (ABS) - was ist das? - YouTube

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Security-backed assets ( ABS ) are those security payments for their earnings and hence their value is derived from and guaranteed (or "supported") by a particular asset base. Asset groups are typically small and illiquid assets that can not be sold separately. Integrating assets into financial instruments allows them to be sold to common investors, a process called securitization, and allows investment risks in the underlying asset to diversify as each security will represent a fraction of the total value of the assorted asset underlying the asset. The underlying asset pool may include general payments from credit cards, auto loans and mortgage loans, for esoteric cash flows from aircraft leases, royalty payments and movie revenues.

Often a separate institution, called a special purpose vehicle, is created to handle securitization of asset-backed securities. Special purpose vehicles, which create and sell securities, use the proceeds to repay the bank that creates, or originates, the underlying asset. Special purpose vehicles are responsible for "incorporating" underlying assets into specific aggregates that will suit the risk preferences and other needs of investors who may want to buy securities, to manage credit risk - often by transferring it to an insurance company after paying the premium - and for distribute payments from securities. As long as the credit risk of the underlying assets is transferred to another institution, the originating bank removes the underlying asset value from the balance sheet and receives cash as securities backed by the sold asset, a transaction that may increase its credit. ranking and reducing the amount of capital needed. In this case, the credit rating of the asset-backed securities will be based solely on the assets and liabilities of the special purpose vehicle, and this rating may be higher than if the originating bank issues the securities because asset-backed securities risks will no longer be attributed to other risks that may be incurred bank of origin. A higher credit rating may allow special purpose vehicles and, by extension, the home institution to pay lower interest rates (and therefore, impose a higher price) on asset-backed securities than if the institution of origin borrows or issues bonds.

Thus, an incentive for banks to create securities assets is to remove risky assets from their balance sheets by having other institutions that bear credit risk, so they (the bank) receive money in return. This allows banks to invest more of their capital in new loans or other assets and may have lower capital requirements.

Video Asset-backed security

Definisi

"Asset-backed security" is sometimes used as a generic term for the type of security supported by a collection of assets, and sometimes for certain types of security - supported by consumer loans or borrowings, leases or receivables other than real estate. In the first case, guaranteed debt obligations (cdo, securities backed by debt obligations - often asset-backed securities) and mortgage-backed securities (mbs, where assets are mortgages), are subset, asset-backed securities. (Example: "The capital market in which asset-backed securities is published and traded consists of three main categories: ABS, MBS and CDO." (Italics added)). In the second case, "asset-backed security" - or at least the abbreviation "ABS" - refers only to one subsection, supported by consumer supported products, and different from MBS or CDO, (eg "As a rule of thumb, securitization backed by mortgages is called MBS, and securitization issues supported by debt obligations are called CDOs. Securitization issues are supported by consumer-supported products - car loans, consumer loans and credit cards, among others - called ABS

Maps Asset-backed security

Structure

On January 18, 2005, the United States Securities and Security Commission (SEC) announced the AB Regulation incorporating the final definition of Asset Backed Securities.

"ABS Definition The term" asset-backed security "is currently defined in Form S-3 means that security is primarily served by cash flows from pools separate from receivables or other financial assets, whether fixed or spinning, that by their terms are converted into cash within a limited time period plus other rights or assets designed to guarantee the timely service or distribution of the proceeds to the security holders SEC has interpreted the phrase "converted into cash by their term" to exclude most of the assets require active behavior to earn cash - such as the sale of non-performing assets and physical property.This also interprets the phrase "discrete pool" to exclude phrases that may change in composition over time.

Lease-Backed Securities. The new rules extend the definition of "asset-backed security" to include rental-backed securities as long as the residual value of the leased property is less than 50% of the initial securitization pool balance (or less than 65% in the case of motor vehicle leases). However, such securities may be registered on Form S-3 only if the residual value of the leased property represents less than 20% of the initial securitization pool balance (or less than 65% in the case of motor vehicle rental)./li>

Assets in Arrears and Non-performing. The new rule specifies that security can be considered "asset-backed security" even if the underlying underlying asset has a total of delinquency of up to 50% at the time the offer was filed as long as the original asset excludes any "non-performing" asset. However, consistent with current practices, rackup registration on [lackluster [Form S-3] will only be available if the arrear asset is 20% or less of the original asset set. An asset is deemed not performing if it meets the applicable waiver of sponsorship (or regulatory bank) policy or if the asset is assumed to be a collectible asset under the terms of the applicable transaction document.

Exception to "Discrete Pool" Terms. The new rules generally codify SEC staff positions that security should be supported by a separate asset pool to be considered an ABS. However, the new rule sets the following exceptions to address market practices.

(1) Any security issued in the main trust structure will meet the definition of "asset-backed security" without limitation.

(2) "asset-backed securities" will also include securities with a prefund period of up to one year in which up to 50% of the proceeds (or, in the case of master trust, up to 50% of the aggregate principal balance of total assets whose cash flow supports ABS) can be used for subsequent pool asset purchases.

(3) New rules are also included in the definition of "asset-backed security securities" with the rolling period at which new financial assets can be obtained. In the case of rotating assets such as credit cards, dealer floorplans and home equity credit lines, there is no limit to the rolling period or the amount of new assets that can be bought during that time. For securities backed by accounts receivable or other financial assets that do not arise under a rolling account, such as car loans and mortgage loans, limited rolling periods will be allowed for up to three years. However, new assets added to the pool during the rolling period must have the same general character as the original pool asset.

According to Table Thomson Financial League, US issuance (excluding mortgage backed securities) are:

2004: USD 857 billion (1,595 issues)
2003: USD 581 billion (1,175 issues)

DRAFT Asset-Backed Securities (ABS) Adam Parkin, CFA Director ...

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Type

Home equity loan

Securities secured by home equity loans (HEL) are currently the largest asset class in the ABS market. Investors usually refer to HEL as a non-service loan that does not fit into the jumbo or alt-A credit categories. While the initial HEL was largely the second subprime mortgage, the first lien loan is now the majority of publishing. Subprime mortgage borrowers have an imperfect credit history and are required to pay higher interest rates than what will be available to specialized agency borrowers. In addition to first and second loan loans, other HE loans may consist of high lending loans (LTV), re-lending loans, scratch and dent loans, or home equity loans (HELOC), owned homeowners used as a method to consolidate debt.

Automatic loan

The second largest subsector in the ABS market is car loans. Automotive finance companies issue securities backed by loans related to the underlying credit. Auto ABS is classified into three categories: prime, nonprime, and subprime:

Prime auto ABS is secured by loans granted to borrowers with a strong credit history.
Nonprime auto ABS consists of loans granted to consumers with lower credit quality, which may have higher cumulative losses.
Subprime borrowers usually have lower earnings, a credited history, or both.

Trust owners are the most commonly used structures when issuing auto loans and allowing investors to receive interest and principal sequentially. Transactions can also be arranged to pay pro rata or a combination of both.

Credit card charges

Securities supported by credit card receivables have been the benchmark for the ABS market since it was first introduced in 1987. Credit card holders can borrow funds in rotation to the specified credit limits. The borrower then pays the desired principal and interest, along with the minimum monthly payment required. Since principal payments are not scheduled, credit card debt does not have an actual due date and is considered a non -ortortised loan.

ABS is supported by credit card receivables issued from the trust that has evolved over time from discrete credentials to different types of major beliefs The most common de-linked master beliefs. The discrete trust consists of a collection of fixed or static receivables transferred to a senior/subordinated bond. The ultimate trust has the advantage of offering double offerings of the same trust as the growing amount of receivables, each of which is entitled to a pro rata proportion of all receivables. Separate structures allow publishers to separate senior and subordinate series in trust and publish them at different time points. The last two structures allow the investor to benefit from a larger set of loans made over time rather than one static pool.

Student loans

ABS is secured by a student loan ("SLABS") consisting of one of four (along with home equity loans, auto loans and credit card receivables) of core asset classes financed through supported asset securities and the benchmark subsector for most interest rate indices floating. The Federal Family Education Loan Program (FFELP) loan is the most common form of student loans and is guaranteed by the US Department of Education ("USDE") with a 95% -98% price range (if student loans are served by a service provider designated as "outstanding players "by USDE replacement rate of up to 100%). As a result, performance (other than the high cohort default rate in the late 1980s) has been historically excellent and the rate of return of investors is very good. The Act on Cost Reduction and Cost Access became effective on 1 October 2007 and significantly changed the economy for FFELP loans; lenders paying special allowances are reduced, the appointment of outstanding players is revoked, the lender's insurance rate is reduced, and the lender pays twice the origination fee.

The second part, and faster developing, part of the student loan market consists of non-FFELP or private student loans. Although borrowing limits for certain types of FFELP loans are slightly inflated by the student loan bill referred to above, basically the static lending limit for FFELP loans and rising tuition fees encourage students to seek alternative lenders. Students use personal loans to bridge the gap between the amount that can be borrowed through federal programs and the remaining tuition fees.

The United States Congress created the Student Loan Marketing Association (Sallie Mae) as a government-sponsored company to buy student loans on the secondary market and to secure student loan pools. Since its first publication in 1995, Sallie Mae is now the main publisher of SLABS and its issues are seen as a benchmark issue. Although for some this may be unfair or inflationary, it seems legitimate.

Utility cost strand

Bond rate reductions (RRB) emerged as a result of the Energy Policy Act of 1992, designed to increase competition in the US electricity market. To avoid disruption when moving from an uncompetitive market to a competitive market, the regulator has allowed utilities to recover certain "transitional fees" over a period of time. These costs are considered to be impassable and added to all customer charges. Since consumers typically pay utility bills before others, the bill has historically been low. RRB offers are usually large enough to create reasonable liquidity in the aftermarket, and the average extension of life is limited by the "right" mechanism.

There are many other cash-flow-generating assets, including housing loans produced, equipment leases and loans, aircraft lease, accounts receivable, dealer plan loans, and royalties. Intangibles are another growing asset class.

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Trading asset-backed securities

"In the United States, the process for issuing asset-backed securities in the primary market is similar to issuing other securities, such as corporate bonds, and regulated by the Securities Act of 1933, and the Securities Exchange Act of 1934, as amended, publicly-backed securities published must meet the SEC standard registration and disclosure requirements, and must submit periodic financial reports. "

"The securities-backed securities trading process in the secondary market is similar to the trading of corporate bonds, and to some extent, mortgage-backed securities.Most of the trade is done in over-the-counter markets, with security phone quotes.There appears to be no trade volume size available to the public, or the number of merchants who traded these securities. "

"A survey by the Bond Markets Association shows that by the end of 2004, in the United States and Europe there were 74 electronic trading platforms for the trade of fixed income securities and derivatives, with 5 platforms for asset-backed securities in the United States, and 8 in Europe."

"Discussions with market participants show that compared to Treasury securities and mortgage-backed securities, many of the illiquid assets are unsecured, and their prices are not transparent, partly because of the unstandardized asset-backed securities effects such as Treasury securities, or even mortgage-backed securities, and investors evaluating different structures, maturity profiles, credit enhancements, and other features of asset-backed security before trading them. "

The "price" of asset-backed security is usually quoted as a spread to the appropriate swap rate. For example, prices supported by credit cards, AAA is assessed for security by two-year maturity by benchmark publishers may be quoted on 5 basis points (or less) for a two-year swap rate. "

"Indeed, market participants occasionally see the highest credit card ratings and car securities as having a risk of default close to the highest-rated mortgage-rated securities, which are reportedly seen as substitutes for risk-free Treasury securities default."

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Securitization

Securitization is the process of creating asset-backed securities by transferring assets from the issuer to a remote bankrupt entity. Credit enhancement is an integral component of this process because it creates a higher ranking security than the issuing company, allowing the issuing company to monetize its assets while paying a lower interest rate than is possible through a guaranteed bank loan or issuance of debt by the issuing company.

Asset Backed Securities - American Express Investor Relations

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index ABS

On January 17, 2006, CDS Indexco and Markit launched ABX.HE, a credit derivative index supported by synthetic assets, with plans to extend the index to other underlying asset types other than home equity loans. The ABS index allows investors to gain broad exposure to the subprime market without holding the actual asset-backed securities.

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Advantages and disadvantages

The significant advantage of asset-backed securities for loan initiators (with associated losses to investors) is that they bring together a set of financial assets that can not easily be traded in the existing form. By collecting together a large portfolio of these illiquid assets they can be converted into instruments that can be offered and sold freely in the capital market. Determining these securities into instruments with different theoretical risk/return profiles facilitates the marketing of bonds to investors with different risk appetites and invests time horizons.

Asset-backed securities provide the following profit-makers, each directly adding to the investor's risk:

Selling these financial assets to a pool of assets reduces risk-weighted assets and thereby freeing their capital, enabling them to earn more loans.
Asset-backed securities lower the risk. In the worst-case scenario where an asset pool is performing very poorly, "the owner of ABS (who is the publisher, or guarantor, or re-modeler, or guarantor of the last resort) may pay the bankruptcy price not the originator." In the event that the originator or publisher is made to pay the same price , it means reinventing lending practices, restructuring from other profitable paths of its originator function and the same publishing norms. and consolidation in the form of mergers or benchmarking (same internal sector, different external sector).

This risk is measured and contained by the lender of last resort from time to time of auction and other Instruments used to inject the same bad debts held over a longer duration to the appropriate buyer over a period of time based on the instruments available to the bank to conduct its business in accordance with the business charter or licensing granted to certain banks. Risks can also be diversified by using alternative geography, alternatively alternative investment vehicles and divisions of the bank, depending on the type and magnitude of the risk.

Exposures from these refinanced loans to "bad credit" decisions (especially in the banking sector, unscrupulous loans or adverse credit selection) are protected by the same seller, or the same re-structurers. Thinking of securitization as a panacea for all illnesses due to poor credit decisions can lead to risk hedging with the transfer of "hot potato" from one issuer to another without any tangible asset on which the borrowed basis is backed up by an increase in value either by a bid discrepancy requests handled or by any of the following factors:

The economic productivity of the business cycle turns from decline to decline (monetary and fiscal measures)
More buyers than sellers in the market
Breakthrough innovation.

On a daily basis transfer from loan from

sub ordinate debt (newly created debt guaranteed by high security) to
Subclasses are created
Subcategories can not be realized

Both senior and bad debt (securitization) may be a better way to distinguish between assets that may require or be found to be eligible for reinsurance or written off or foiled against a collateral asset or manifested as a trade-off of a loan granted to or increment of goods or services.
This is actually built in any bank under the terms of this deposit, and the same dynamic updates relate to the level of exposure or bad credit to be faced, as guided by accounting standards, and decided by financial and non-market risk (diversifiable), with the possibility of market risk (not diversifiable), for certain types of accounting headings such as those found in the balance sheet or reporting or recognition (declarations by company standards) of the same as short-term, long-term, medium-term debt and depreciation standards.

The publication of accounting practices and standards relates to different holding patterns, adding to the accountability sought, in case the problem gets bigger.

The originators get the cost of originating loans, as well as from serving assets throughout their lives.

The ability to derive substantial costs from originating loans and securities loans, coupled with the absence of any remaining liability, alters the incentives of the originators in favor of loan volumes rather than the quality of loans. This is an intrinsic structural defect in the securitization-loan market that is directly responsible for the credit bubble of the mid-2000s (decades) as well as the credit crunch, and the concurrent banking crisis of 2008.

"A financial institution from a loan sells a collection of cash-generating assets to a specially designed third party" SPV ". SPV (securitization, credit derivatives, commodity derivatives, temporary capital-based commercial paper and funding are sought for run, corporate merger activities, external financing in the form of venture capitalists, angel investors etc. into some of them) "is designed to isolate investors from credit risk (availability and credit issuance in case of bad credit rating or loan hedge already available as part of practice ) from the original financial institution ".

SPV then sells loans collected to a trust, which issues securities with interest that can achieve a separate credit rating from a financial institution from a loan. A typically higher credit rating is given because the securities used to fund the securitization rely solely on cash flows created by the asset, not on the issuer's promise of payment.

The monthly payment of the underlying asset - loan or receivable - usually consists of principal and interest, with scheduled or unscheduled items. The cash flows generated by the underlying asset can be allocated to investors in different ways. Cash flow can be directly forwarded to the investor after deducting administrative costs, thus creating a "pass-through" security; alternatively, cash flow can be carved according to certain market rules and demands, thereby creating "structured" securities. "

This is an organized way to enable the credit market at least in the Developed Primary which can not be traded on the open market, company to company, bank to bank to keep the market running, float and operational and liquidity provision by the liquidity providers in the market, which is investigated by very good for any "deviation, excessive instruments based on hedging and market manipulation" or "outlier, volume" based on trading or decisions "anomalies, treasury trading blocs' based on the company without proper and posterior/prior intimation", by respective regulators as directed by law and as seen in regular trading hours in pre-market trading/after hours or in events based on certain shares and corrected and researched for insider trading in the form of trade cancellation, reissue of canceled trading amount or freezing market (sek specific urbanities taken from the list of trades for a period of time) on the nt night of the pre-set, determined by the maximum and minimum fluctuations in trading on the secondary market over the counter market.

Generally Primary markets are more closely scrutinized by the same commissions but these markets fall under the category of trade and institutional guarantees and associated companies, as well as guarantees and are therefore governed by a broader set of rules as directed in corporate and business law and the reporting standards governing business in geography Specific.

Securitization of trade receivables is a matter of rating? - eKuota

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References

Lecture IV securitization - ppt download

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External links

Leading Investment Banker in Asset Backed Securities Market, in accordance with Asset Backed Asset
Asset Backed Securities Videos manufactured by DW (Deutsche Welle)

Source of the article : Wikipedia

Asset-backed security

Minggu, 17 Juni 2018