Credit Enhancements in Securitisations: How to Dress Up a Dodgy Deal

In the world of securitisations, not all assets are created equal - and some are, frankly, a bit ropey. Say hello to credit enhancement: the financial equivalent of a good PR team. These clever mechanisms are designed to make a slightly wobbly asset pool look like a rock-solid investment opportunity. They boost the credit profile of securities, calm the nerves of investors, and help rating agencies sleep at night.