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Paul
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

September 7th, 2004, 4:13 pm

What are the most common/important financial acronyms and their meanings?Thanks to SRG and Exotiq.P
 
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pobazee
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

September 7th, 2004, 5:27 pm

ABS, MBS, CMBS, CMO, CDO, CBO, and CLO are subset of what are generally characterized as structured products. Below is what the acronyms stand for.MBS = Mortgage-Backed Securities, and the universe of MBS is vast, it is however reserved by market participants to denote the pass-through mortgage bonds (agency pass-through and nonagency pass-through). CMBS = Commercial Mortgage-Backed Securities, which are trust certificates (bonds) backed by a pool of commercial mortgage loans. The certificates are tranched on the basis of prepayment and credit.CMO = Collateralized Mortgage-backed Obligations, which are pool of pass-through mortgage bonds tranched to reflect the degree of sensitivity to prepayment (particularly, agency CMO).ABS = Asset Backed Securities, for example home equity loans (HEL), credit cards, etc. These are securities backed by receivables [payments] that are either secured (HEL) or unsecured (credit card), tranched on the basis of prepayment and default risks.CDO = Collateralized Debt Obligation, for example, ABS CDO which consist of a portfolio of different ABS bonds, and the payments to the holders of these trust certificates are derived from the cash flows of the ABS bonds.CBO = Collateralized Bond Obligation, for example high yield [emerging market] CBO which consist of a portfolio of different high yield [emerging market] bonds.CLO = Collateralized [leveraged] Loan Obligation which consist of a portfolio of different leveraged loans.
Last edited by pobazee on September 16th, 2004, 10:00 pm, edited 1 time in total.
 
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monlavingia
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

September 16th, 2004, 10:20 am

CDOs consist of two types of structures: Cash CDO - Made up of the standard debt obligations Synthetic CDO - A synthesized portfolio of CDO/Bonds/ABS using Total Returns Swaps and CDSStructured Products are also originated in one of two ways:Balance Sheet CDO/CLO/CBO... - the reference assets for the SDO portfolio are taken from a company/firm's balance sheetArbitrage CDO/CLO/CBO... - the reference assets are bought by a firm or conduit or SPV (Special Purpose Vehicle) with a view to repackage them and sell them on as the structured productCDOs also come in two management styles:Static CDO - The reference assets are bought and then are kept untouched for the term of the productManaged CDO - The reference assets are bought (the portfolio is ramped up) and then the CDO manager would alter the portfolio as they see fit
 
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SPAAGG
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

September 21st, 2004, 2:53 pm

For MBA (master in business - administration) students I add the following :CEO : Chief Executive OfficerCFO : Chief Financial Officer
 
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exotiq
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

September 27th, 2004, 12:22 pm

CFO = Collateralized Fund Obligation, much like a CDO, but the underlying pool are hedge fund shares or one or more funds of hedge funds.CEO = Collateralized Equity Obligation, the underlying pool consists of a portfolio of individual stocks, preferred stock, stock ETFs, indexes, or equity derivatives.Like the other CxO structures, these basically create a "holding company" ballance sheet to provide a leveraged/OTM call option to the equity tranche, a high-rated debt claim to the AAA tranche, and mezzanine "call spread" like tranches for the bonds in between with nice portfolio characteristics.
 
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DidierC
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

February 10th, 2005, 1:57 pm

Asset Backed Securities (ABS) are securities for which the interest and principal are paid using cash flows derived from a portfolio of underlying assets. Portrayed in a diagram, on the one side are assets generating cash flows (generally receivables) and displaying a certain degree of homogeneity and on the other side are the securities: Selling of assets interest + principalundelying asstes <======================> issuer <=======================> ABS Payments ABS issue proceedsTo put it another way, the underlying assets are said to be securitized, i.e. converted into securities. Securitization enables assets that are not very liquid to be converted into negotiable securities. Besides making illiquid assets liquid, we will deal further on with the main motivating factors behind this type of operation. By way of illustration, the most common securitized assets are mortgage loans (Mortgage Backed Securities or MBS), commercial mortgage debt (CMBS), aircraft leases, corporate bonds & loans (CBO, CLO, CDO), commercial debt (trade receivables), receivables ensuing from the use of credit cards (credit card receivables), American government loans to students (student loans) and future revenues (such as, for instance, the future revenues of a group of pubs, a telecom operator, petrol extraction or investment fund management fees).
 
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jjyu
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Joined: September 28th, 2005, 12:34 pm

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

September 29th, 2005, 12:25 pm

MBS = Mortgage Backed Securities, in which CMO Collateral Mortgage Obligation is one of the product type under the MBS umbrella.As far as the cash flow patterns are concern, MBS can be divided into two major categories:Pass-thru and structure product;Pass-thru products pass the principal and interest payment to the investors after subtracting a small servicing fee;Structure products include CMO, IO/PO, .... in which cash flows are reallocated into tranches so the collaterals' prepayment risk are not directly passed to the investors. Some tranches might have more prepayment risk exposure while some have less.
 
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exotiq
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

October 24th, 2005, 12:25 am

Here's just as imporant a question about all these things once we have defined them and explained how to create them: other than the supply side of banks and arbitrageurs who find these as convinient way to trade away credit risk, why is anyone interested in these things from the demand side? Is it leverage, fine-tuning of prepayment risk, etc.?Also, how do these tranches trade?
 
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as2100
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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

February 21st, 2006, 4:05 pm

I don't know all the reasons why CDOs, MBSs etc are popular but one of the reasons why people do create these huge synthetic structures with tranches is to be able to sell higher-rated tranches to institutional investors such as pensions, who often won't buy otherwise very risky assets.Don't forget, these guys have deep pockets, so it makes them a very lucrative market!
 
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minz
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Joined: October 17th, 2005, 9:17 am

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

March 29th, 2006, 7:58 am

To exoticq:It helps companies to hedge their risk therefore reduce their capital reserve, while the cost is not high. You can refer to Basel II for more info.Normally they are traded OTC at issuance, and you can trade them via some I-banks.Or you can trade itraxx.
 
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asufyan
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Joined: July 28th, 2005, 3:58 pm

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

November 28th, 2006, 11:23 pm

Why is is that there is a difference in the market implied spreads or ABS vs CDO with diversified ABS paper? Hope someone can help out.
 
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tommytrojan
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Joined: June 19th, 2006, 9:05 am

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

December 4th, 2006, 2:33 pm

I have a question: Why isn't the OAS (market risk premium) on MBS products larger than it is? All mortgages have negative convexity. In other words, MBS prices will fall faster when interest rates rise than they will increase given an equal sized decrease in interest rates. Shouldn't investors be compensated for the fact that the upside potential is relatively small compared to the downside?
 
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tommytrojan
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Joined: June 19th, 2006, 9:05 am

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

December 4th, 2006, 2:41 pm

My other question is: Why bother modeling prepayments? (1) term structure estimates are not terribly accurate(2) all borrowers have a different strike price(3) even if the option is in the money, we don't know actual level of burnout (failure to exercise)(4) 1-3 yield inaccurate forecasts of future cashflows. Hence, inaccurate estimates of duration and convexity.Can anyone tell me if in practice a dynamic hedging strategy using something like GARCH to estimate future volatility and hedge ratios is more precise?
 
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marche
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Joined: January 18th, 2007, 2:01 pm

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

January 23rd, 2007, 9:57 am

Hi!do you know what the exotic assets are and its difference with future flows?
 
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lawho
Posts: 100
Joined: July 14th, 2002, 3:00 am

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

March 8th, 2007, 12:58 am

QuoteOriginally posted by: marcheHi!do you know what the exotic assets are and its difference with future flows?any one can shed more light on CFXO?tks
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