The individual components of the portfolio would be unattractive or even unobtainable in this form for
However, the composition of the portfolio makes it possible to
combine together and sell a range of assets and risks. By grouping together different
types of credit risk, different risk profiles can be created.
Even if a pool or portfolio is created, lack of diversification can lead to a concentration
Credit bonds securitise the risks and transfer them to third parties as credit-linked
notes, collateralised debt obligations and asset-backed securities. As a result, the
buyer takes on the risk associated with a loan portfolio.