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Introduction to Securitization by VINOD KOTHARI, FRANK J. FABOZZI

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KEY POINTS OF THE CHAPTER

Technically speaking, the distinction between asset-backed commercial paper (ABCP) and asset-backed security (referred to as term securitization to distinguish it from commercial paper) is primarily one of the tenure of the paper.
ABCP was primarily designed to acquire and fund trade receivables of larger corporations but the collateral composition shifted heavily into investing in financial instruments. Today, ABCP conduits invest in a wide range of financial instruments.
The issuance of ABCP is a standard and ongoing feature, so banks mostly run ongoing programs for ABCP issuance on their balance sheet as a specific entity called a conduit.
A conduit is a thinly-capitalized special purpose vehicle satisfying the general criteria for bankruptcy remoteness.
There are different conduits based on different criteria: (1) liquidity support, (2) number of sellers, and (3) asset type,
Depending upon whether the bank provides full or partial liquidity support to the conduit, ABCP can be either fully supported or partly supported.
ABCP conduits can be either single-seller or multiple-seller conduits with the latter being the most common form.
In a multiple-seller conduit, the credit enhancement (and/or liquidity enhancements) are found both at the level of transfer by each originator (originator-level enhancement) and at the program level.
Conduits are classified based on their asset focus and include (1) arbitrage conduits, (2) hybrid conduits, ...

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