Bursatilización e Instrumentos Respaldados por Activos
SECURITIZATION
fixed income
includes non traditional fixed income sector
Securirised debt
how does it work
creation of multiple tranches.
the return and risk profiles of each tranche is different.
FOR EXAMPLE
Investor with a relatively low risk tolerance, may choose to invest in the tranche with a AAA credit rating
Why invest in securitised debt?
Offers diversification of risk and return, as it is relatively less correlated to traditional bonds and stocks.
liquid and transferable
Asset- backed securities
non- traditional debt securities created from the pooling of non mortage loans such as
auto, consumer or student loans
and receivables like credit card receivables
investor with relatively low risk tolerance
may choose to invest in the senior tranche with the highest priority claim
Investors with more risk
may choose to invest in the subordinated trenches with lower credit ratings, but compensated with higher yields
why invest in ABS?
secured by some type of collateral
backed by different types of loan extended to many individual borrowers
relatively less correlated to traditional fixed income sectors
diversification
MORTAGE BACKED SECURITIES
non traditional debt securities created form the pooling of mortgage loans
US
Agency MBS
Non Agency MBS
Ginnie Mae
Fannie Mae
Freddie Mac
issued by private financial institutions
why invest in mbs?
AAA rated
explicit or implicit guarantee by the US government
diversification