Asset-backed bond

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.

Asset-backed bond.

Asset-backed bonds, also known as asset-backed securities, are secured by loans or by money owed to a company for merchandise or services purchased on credit.

For example, an asset-backed bond is created when a securities firm bundles debt, such as credit card or car loans, and sells investors the right to receive the payments made on those loans.

References in periodicals archive ?
We entered the global capital markets for the first time, issuing a US$3 billion asset-backed bond. We concluded the first-ever listing of one of our portfolio companies, ADNOC Distribution, and in partnership with BlackRock and KKR, we completed the largest infrastructure investment in the Middle East, unlocking US$4 billion in value.
Just as we were heading to the presses with this edition of Islamic Business & Finance, BA taxied onto the runway with a $927 million asset-backed bond. I read that phrase and my heart skipped a little beat...
The asset-backed bond can also be sold under Regulation S to investors outside the United States (a so-called offshore transaction).
SLM Corporation (NYSE: SLM), or Sallie Mae, is planning to launch a USD812.35m asset-backed bond, Dow Jones has reported, citing a person familiar with the matter.
Ford Motor Company (NYSE: F), a United States-based automaker, has increased the size of its asset-backed bond to USD880m, Wall Street Journal has reported citing a source familiar with the deal.
Avis Budget Group Inc (NYSE: CAR), a US-based company that offers vehicle rental services, has announced that its Avis Budget Rental Car Funding LLC (AESOP) subsidiary has completed an asset-backed bond offering.
These products were another form of an asset-backed bond and comprised of large and diversified loans created by banks.
Fears have grown the refinancing -- through an expected securitisation -- may be even more challenging after the credit crisis effectively closed the European asset-backed bond market, which many predict may not reopen until the second half 2008.
Fears have risen over the long-awaited refinancing of the debt through a planned securitisation after the credit crisis effectively closed the European asset-backed bond market, with many predicting it will not reopen until the second half of 2008.
"Given the uncertainty around pricing and how much one would actually get out of the capital markets, we have decided to revisit the asset-backed bond once there is a clearer line of sight," said finance director Chris Rogers.
Malaysia is reportedly in the process of launching the first Islamic asset-backed bond, where investors would receive a portion of the lease rental stream.