In a world without credit derivatives, investors in real-estate or asset-backed securities had two options: either buy particular pools of collateral or not buy them. Shorting a position or buying protection was out of the question.
These limitations were overcome by mid-2005 when investors welcomed the birth of credit default swaps on asset-backed securities (ABCDS).
These new synthetic instruments acted as credit default swaps on individual home equity issues in the market not previously ava
The week on Risk.net, December 2–8, 2017Receive this by email