An Asset-Backed Security (ABS) is a financial security that is collateralized by underlying assets and is sold to an issuer. The issuer then packages the loans into a portfolio.
ABSs are typically collateralized by assets such as real estate, auto loans, payment streams from credit cards, and other non-traditional forms of collateral.
ABSs are typically bought by investors in the secondary market who are looking for a return on their investment.