In general, all tradeable commercial papers which are backed by assets of the issuer. – In particular, debt instruments backed by payments from a portfolio in which a large number of individual receivables are pooled. At the end of 2007, before the subprime crisis turned into a financial crisis, investors (banks, funds, insurance companies and, to a lesser extent, private households) held securities of this type worth around 450 billion euros in their portfolios worldwide; eighty percent of these were considered toxic securities, i.e., nonvaleurs. In some countries, these had to be taken over by the state in order to rebalance bank balance sheets. – The shock had the effect that – from then on, the assessment of new securitization papers was carried out very precisely and critically by those looking for them, and that people no longer relied blindly on ratings from rating agencies. – On the other hand, the providers, i.e. the issuers of such securities, were forced to provide a maximum of information on securitized receivables. The complexity (the state of being intricate and difficult to see through) of the products – pools were reported that were explained in more than 200 printed pages in legalese that was difficult to understand! – noticeably. – Sometimes also said in particular of catastrophe bonds issued by reinsurers by way of retrocession in the form of private placement. – See ABS funds, Absence capitalism, Assets, illiquid, Asset-backed commercial paper, Asset-backed securities, Asset-backed securities-collateralized debt obligation, Assignats, Impact carriers, Off-exchange, Automobile loans, securitized, Back-to-originator postulate, Collateralized bond obligations, Claw-back clause, Collateralized debt obligations, Collateralized loan obligations, Conduit, Defeasance, Diamond thesis, Single-originator securitization, Embedded-value securitization, development process, iterative, first-loss tranche, catastrophe bonds, credit expansion, credit card fiasco, loan securitization, moral hazard, pay-green initiative, residential mortgage-backed securities, retrocession, single master liquidity conduit, debt coverage ratio, subprime crisis, tranche thickness, true-sale securitization, residential mortgage loans, securitized, backing, corporate loans, securitized, securitization structure, interest rate freeze, special purpose vehicle. – See ECB Monthly Bulletin of February 2008, pp. 89 et seq. (market for various securitization instruments in the euro area: broad presentation; overviews), Financial Stability Report 2010, pp. 73 et seq. (sources of risk; overviews), ECB Monthly Bulletin of July 2011, pp. 22 et seq. (funding/securitization nexus since 2009; overviews), ECB Monthly Bulletin of October 2011, pp. 79 et seq. (securitizations and debt issuance).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

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