What is Lehman brothers asset-backed Index securities
Lehman brothers securities backed by assets is still the name of the index, fixed income, focusing on securities backed by assets such as bullet-structured, controlled amortization and securities which have a minimum average term of one year. The index, which is currently supported by Bloomberg L. P., serves as a benchmark for funds of securities secured by assets.
Breaking down ‘Lehman brothers asset Index securities
Lehman brothers asset backed securities index is a subset of the index Lehman brothers aggregate bond is now known as the Bloomberg commodity Index Barclays Bond index – the primary benchmark for bond funds. First established in 1973, the Lehman index was renamed after the “Lehman brothers” declared bankruptcy in 2008 due to the impact of the mortgage crisis.
Index ABS specifically focuses on three types of asset, secured debts: loans, credit cards and loans. All securities in this index from the senior classes about the problem, this means that the lower tranches are not included.
As asset-backed securities index works
Securities asset-backed securities vary significantly depending on the assets they are based around, and can be a complex and potentially risky investments. The index of the ABS may offer a relatively simple way to access and keep track of securities that can be quite complex and fluctuations in their structure and assessment.
The purpose of these investments is the creation of securities that can generate cash by collecting certain types of illiquid assets based on the characteristics and the risks they have in common. But, as seen during the mortgage crisis, they can carry greater volatility.
Securities backed by assets are typically divided into three tranches: class A, B and C. first, tranche a, sometimes referred to as the senior tranche – the biggest piece of higher-ranking products. Tranche B includes ABS with lower credit quality but a higher yield, while the tranche may not even be in demand for investors, but can help to compensate for the loss.
Three species tracked by the former index, the Lehman brothers credit collateral securities, asset-backed, auto loan ABS and credit card ABS have similarities and differences. As noted, the index focuses on the top-tranche securities.
Home equity ABS focus on home equity loans, which have some similarities with mortgages, this means that close attention must be paid to the credit ratings of the borrowers whose loans support security.
Auto loan ABS are totally different, considering the special types of car loans’ amortization, cash flow, size and likely to be refinanced.
And credit card receivable ABS, without depreciation, the secured assets can be marked by volatility taking into account (among other things) the difference with which the borrowers can pay off your balance or let their credit increase of debt on the map.
In asset-backed securities index offers a tool by which investors can track trends and their portfolios of complex instruments like these, offering a relatively simple method to track the price and performance.