Synthetic ABS is hot property

In the pre-derivatives world, investors in mortgage-backed securities or real-estate asset-backed securities had two options: either to buy particular pools of collateral, or not to buy them. Shorting a position or buying protection were out of the question.

But by mid-2005 those limitations had changed as investors welcomed the birth of credit default swaps on asset-backed securities, known colloquially as ABCDS. These new synthetic instruments acted as credit default swaps on individual hom

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