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An introduction to asset backed securities


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An introduction to asset backed securities

  1. 1. An Introduction to Asset-backed Securities By Firminy Capital Sarl
  2. 2. Introduction • Throughout its history in Luxembourg, Firminy Capital Sarl has established itself as a securitization firm serving clients in Europe and beyond. Securitization firms like Firminy Capital Sarl often manage products such as asset-backed securities, which are widely traded in financial markets throughout the world. As the name suggests, an asset-backed security is a financial security backed by assets other than real estate or mortgage products. Commonly backed by assets such as leases, receivables, loans, and credit card debt, an asset-backed security represents an alternative for individuals looking to invest in corporate debt.
  3. 3. Asset-backed Securities • Originators of asset-backed securities reduce their risk-weighted assets, which frees up additional capital to originate more loans. If a pool of assets performs extremely poorly, originators typically do not have to pay the cost of bankruptcy. As such, the asset-backed security represents a possible solution for banks and other originators looking to eliminate risk assets from their balance sheets.