Over the last two months, ASR has reported weekly that as corporate and high-yield markets have experienced a great amount of volatility, the asset-backed securities market has been able to hold its own and not let the outside factors influence it. A new report by PaineWebber has addressed what factors have kept ABS sheltered.
The main factor is diversification of asset-backed securities pools. "You're looking at pools which are loans and receivables from across the country," said Tom Zimmerman, director of research at PaineWebber. "Diversification across all sorts of people, all sorts of walks of life, and all sorts of parts of the country gives you a diversification which you're not going to get by buying a corporate bond, which is subject to event risk by that corporation, or even a specific industrial segment can have a problem."