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 ?
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.
The deal, in the form of an asset-backed bond issue, is a first for showbusiness and the bond market.
Telewest, which supplies a telecommunication service across Merseyside and the North West was also reported to be planning to launch an asset-backed bond early in the new year, aiming to raise around pounds 200m.
Global Banking News-17 June 2010-Bank of America boosts asset-backed bond sales(C)2010 ENPublishing - http://www.
Global Banking News-14 December 2009-ECB may encourage asset-backed bond market(C)2009 ENPublishing - http://www.
All of the Company's asset-backed bond transactions are treated for accounting and tax purposes as financing arrangements so the mortgage loans are retained in the consolidated balance sheet of NovaStar Financial, Inc.
The European Central Bank (ECB) is in early discussions to find ways to make loans against approxiamtely EUR1tn of asset-backed bonds more attractive to financial institutions, according to reliable sources quoted by Reuters.
US sub-prime loans effectively poisoned asset-backed bonds as struggling American borrowers defaulted on their repayments, which then triggered the crippling global credit squeeze and subsequent banking meltdown.
Although uncommon in most municipal deals, different ratings based on maturity are common with asset-backed bonds, such as home equity debt.
Bowie has opened what is envisioned as a new market for so-called asset-backed bonds, which derive value from payments on such things as home mortgages or car loans.