Results for tag: "Asset Backed Securities"

In finance, the Asset-Backed Securities (ABS) market refers to the trading and issuance of securities that are collateralized by a pool of assets. These assets can include loans, leases, credit card debt, royalties, or receivables from various financial activities. Essentially, ABS are structured financial products that are backed by underlying assets which generate cash flows. They differ from traditional unsecured bonds due to the presence of these tangible backing assets. When investors purchase an ABS, they are entitled to receive payments derived from the underlying assets' performance. These securities enable originators to efficiently fund their operations by selling their cash-flow-generating assets to a special purpose vehicle (SPV), which then issues the ABS to investors. This process transfers the associated risks of the assets off the originator's balance sheets, while providing liquidity and access to a broader base of investors who are interested in tailored levels of risk and return. The ABS market features a variety of players, including commercial banks, finance companies, and investment firms that originate loans or create receivables. Also, specialized investment banks may structure these products, while rating agencies assess their credit quality. Participants further include institutional investors, such as pension funds, insurance companies, and hedge funds that invest in these securities. Prominent companies in this market include JPMorgan Chase, Bank of America Merrill Lynch, Citigroup, and Goldman Sachs, which are involved in the structuring and selling of asset-backed securities. Asset management companies like BlackRock and PIM Show Less Read more