Asset backed securities : risks, ratings and quantitative modelling

B.H.B. Jönsson, W. Schoutens

Research output: Book/ReportReportAcademic

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Abstract

Asset backed securities (ABSs) are structured finance products backed by pools of assets and are created through a securitisation process. The risks in asset backed securities, such as, credit risk, prepayment risk, market risks, operational risk, and legal risks, are directly connected with the asset pool and the structuring of the securities. The assessment of structured finance products is an assessment of these risks and how well the structure mitigates them. This procedure is partly based on quantitative models for the defaults and prepayments of the assets in the pool. In the present report we look at the risks present in ABSs, present a collection of different default and prepayment models and describe two major rating agencies methodologies for assessing and rating ABSs. The topics covered in the report are illustrated by case studies.
Original languageEnglish
Place of PublicationEindhoven
PublisherEurandom
Number of pages62
Publication statusPublished - 2009

Publication series

NameReport Eurandom
Volume2009050
ISSN (Print)1389-2355

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