Asset Backed Credit Default Swap - ABCDS


DEFINITION of 'Asset Backed Credit Default Swap - ABCDS'

A redit default swap wherein the reference asset is an asset-backed security rather than a corporate credit instrument. The buyer of an asset backed credit default swap (ABCDS) is buying protection for defaults on asset-backed securities or tranches of securities, rather than protecting against the default of a particular issuer.

BREAKING DOWN 'Asset Backed Credit Default Swap - ABCDS'

Asset-backed credit default swaps are structured differently from other credit default swaps due to the nature of the instrument being hedged. For example, since many asset-backed securities amortize and pay monthly, the credit default swap will more closely match these features. The most widely used ABCDS transactions cover U.S. subprime mortgage tranches of mortgage securitizations.

  1. Credit Default Swap - CDS

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  2. Collateralized Mortgage Obligation ...

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  3. Contingent Credit Default Swap ...

    A variation on the credit default swap (CDS). In a simple CDS, ...
  4. Recession

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  5. Default

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  6. Asset

    1. A resource with economic value that an individual, corporation ...
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