Debt

Debt in securitisation is a type of financial instrument that is created by pooling together a group of loans or other debt obligations. The debt is then divided into tranches, or slices, with each tranche having a different risk and return profile. The tranches are then sold to investors, who receive a stream of payments from the underlying debt obligations.

Securitisation can be a way for banks and other financial institutions to raise money and to reduce their risk exposure. It can also be a way for investors to gain exposure to a diversified pool of debt obligations.

There are a number of different types of securitisations, each with its own unique features and risks. Some of the most common types of securitisations include:

- Mortgage-backed securities (MBS): MBS are securitisations that are backed by residential mortgages.
- Asset-backed securities (ABS): ABS are securitisations that are backed by a variety of assets, such as credit card receivables, auto loans, and student loans.
- Collateralized debt obligations (CDOs): CDOs are securitisations that are backed by a portfolio of debt obligations. CDOs can be complex and risky investments.