Asset-backed securities are debt instruments secured against assets or cash flows from items such as car loans, credit card debt, mortgage loans, aircraft leases or royalty payments. The assets are pooled or bundled together and used as collateral for the issue of debt instruments in a process known as securitization. A special purpose vehicle (SPV) is formed to carry out the securitization and pay back the company that owned the assets. The removal of the assets from a company's balance sheet and the money it receives for them may improve its credit rating and reduce the capital it needs.

See also: Mortgage-backed Security