Bringing asset-backeds to the masses

Credit derivatives have already changed the face of corporate credit and the asset-backed securities market is the next to be transformed. Dealers and investors are optimistic about the new market's potential and predict fast growth. By Rachel Wolcott

The credit derivatives market is bracing itself for its next phase of growth. A year ago, the idea of credit default swaps (CDSs) on asset-backed securities (ABSs) was considered by most investors and even some bankers as slightly far-fetched, with many wondering who would be end-users for such an instrument. For a relatively stable asset class like ABSs, why would there be a need to hedge exposures?

That impression has changed quickly. Over the past six to nine months, dealers report a