Asset Backed Securities (ABS)
In the event of an asset backed-transaction, numerous, if possible, similar claims (debt pool) are sold to achieve quick liquidity. Sellers are made up of enterprises as well as banks that have sufficiently large debt portfolios at their disposal. Buyers are special-purpose enterprises that back the purchase price by issuing securities. ABS is the term for these securities or certificates of indebtness, their subject being the payment claims against the special-purpose enterprise. These claims for payment are backed by a stock of unevidenced claims (assets), which are assigned to the special-purpose enterprise and render the liability base for the owners of the asset-backed securities. Seller remains responsible for debt collection; buyer assumes default risk, usually without recourse.