An Introduction to Asset-Backed Securities


  • Basic understanding of Fixed income instruments is good to have

  • Access to a computer / android with internet access is required


This course discusses the benefits of securitization, describes securitization, and explains the investment characteristics of different types of Asset Backed Securities (ABS). The terminology regarding ABS varies by jurisdiction. A mortgage-backed security (MBS) is an ABS backed by a pool of mortgages, and a distinction is sometimes made between MBS and ABS backed by non-mortgage assets. This distinction is common in the United States, for example, where typically the term “mortgage-backed securities” refers to securities backed by high-quality real estate mortgages and the term “asset-backed securities” refers to securities backed by other types of assets. Because the US ABS market is the largest in the world, much of the discussion and many examples in this reading refer to the United States.

This course will help the student understand the importance of securitization from a macroeconomic perspective. I will be discussing the benefits of securitization for economies and financial markets, talking about securitization and identifying the parties involved in the process and their roles. I shall also discusses typical structures of securitizations, including credit tranching and time tranching. Further more, I will be talking about securities backed by mortgages for real estate property, focusing on the types of residential mortgage designs, residential MBS and commercial MBS, respectively. I will conclude the course with a lecture on Collateralized debt obligations.

This course is very useful for anyone interested in entering the Fixed Income field of Investments, especially those entering the ABS arena.

Who this course is for:

  • Students interested in learning about Fixed Income instruments
  • Students who would like to learn about ABS, MBS, CBOs and other financial instruments issued through securitization
  • This is a sub topic of “Fixed Income Fundamentals” and is taught with that subject, so any one enrolled in that course doesn’t need to enroll separately for this course