Asset Backed Credit Default Swap - ABCDS

Dictionary Says

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.

Investopedia Says

Investopedia explains '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.

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