Securitised debt market rebuilding reputation

Risk misconceptions harmed securitised debt asset class after sub-prime crisis, causing an exodus of investors

The securitised debt market has suffered throughout the economic crisis due to negative associations between it and its sub-class of sub-prime debt. However, groups are positive about the market, citing a misunderstanding about the risks the asset class actually poses to a fund manager's portfolio. Securitised debt, or structured bonds, work to increase a company's balance sheet and improve its capital ratio. Through this process, a company will take a pool of its assets and sell them to a special purpose vehicle (SPV) which then issues shares in the ring-fenced assets to investors. ...