ABS Are Increasingly Sold at Discount Prices: Structured Weekly

Companies are increasingly finding that to borrow in the asset backed securities market, they need to use a tactic common in the world of leveraged buyout financing: offering debt at discounted prices.

Buying these securities might seem like a good way to boost returns, but investors should be wary of them, according to Income Research + Management. Because a chunk of the yield comes when the securities get repaid at par, waiting that long entails taking more risk, the asset management firm said.

About $6 billion of asset backed securities have been sold this year at 99 cents ...