Credit enhancement of asset-backed security, Financial Management

Credit enhancement of an asset-backed security implies the existence of support for one or more of the bondholders in the structure. Credit enhancement levels vary based on the credit rating each rating agency provides to the issuer. Hence, the level of credit enhancement is decided by the rating agency. Two types of credit enhancement structures are there. They are:

  1. External Credit Enhancement
  2. Internal Credit Enhancement
Posted Date: 9/8/2012 9:07:32 AM | Location : United States







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An asset-backed security is a type of bond or note that is based on a pool of assets, or collateralized by the cash flows from a specified pool of underlying assets. As