What is resecuritisation?

Answer 1

Resecuritisation refers to the process of re-packaging existing asset-backed securities (ABS) into new securities, effectively creating a new layer of financial instruments. This involves taking already securitized assets, such as mortgage-backed securities or collateralized debt obligations, and creating new securities backed by these existing assets. The goal is often to improve liquidity, manage risk, or enhance the yield of the newly structured products. This practice can also complicate the risk assessment of financial products, as it layers financial exposures.