Asset-Backed Security (redirected from Asset-Backed Bonds)

Asset-backed security

A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate.

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Asset-Backed Security

A debt security collateralized by some receivables on some credit sale. Common examples of this collateral include receivables on credit cards, automotive loans, and similar assets. Returns on these securities come from customers' payments on their credit cards and other loans that may be backing the securities. Banks and companies package and sell their receivables to investors in order to reduce the risk of loan defaults. See also: Mortgage-backed security.

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asset-backed security

A debt security collateralized by specific assets. Although the term applies to any debt backed by identified assets, it generally refers to securities backed by short-term collateral such as credit-card receivables, car loans, and home-equity loans. Because even the most financially strapped companies can hold valuable assets, it is possible for the credit quality of asset-backed securities to be substantially better than the general credit of the company issuing the securities.

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Asset-Backed Security (ABS)

What Does Asset-Backed Security (ABS) Mean?

A financial security backed by a loan, a lease, or receivables other than real estate and mortgage-backed securities. Asset-backed securities are an alternative to investing in corporate debt.

Investopedia explains Asset-Backed Security (ABS)

An ABS is essentially the same thing as a mortgage-backed security except that the securities backing it are assets such as loans, leases, credit card debt, a company's receivables, or royalties but not mortgage-based securities.

Related Terms:
• Asset
• Corporate Bond
• Derivative
• Mortgage-Backed Securities—MBS
• Securitization