Asset-linked structured obligations
(a class of securities)
Asset-linked, or asset-backed securities are a class of instruments where the amount payable on redemption is linked to the value of specific assets owned by the issuer (often an SPV).
Such securities may take the form of notes or certificates.
For the investor the value of these instruments is derived from, or is based on, a reference asset, market measure or investment strategy. These instruments may be structured as hybrid securities (where a derivative is added to the asset pool to balance or enhance the exposure) or securitize the asset in a straightforward way by passing on to the investors the exposure to the asset with no safeguards or enhancements.
Structured products are more often privately placed than traded in open markets.
It is not uncommon to use structured instruments to securitize single assets, such as real estate, art or a share in a private venture. Besides adding liquidity to the investment and enabling easy exposure-sharing between multiple investors, such securitization is often favoured by family offices and other institutionals who prefer to have a security in their books rather than the asset itself.
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