An asset-backed security (ABS) is a type of debt investment tool in which a pool of combined assets serves as collateral. Typically, the pooled assets used for an ABS include those that generate cash flow from debt, including home or auto loans, student loans, or credit card balances. The process of pooling those assets is called securitization.

An ABS is a type of bond and pays income over a set amount of time, until that bond reaches maturity. It can be an interest income-generating alternative to other debt investment tools, such as corporate bonds or bond funds. UMB offers ABS trust services. For more information, contact the UMB asset-backed securities team.

Historically, Delaware has been a desirable jurisdiction in which to establish statutory trusts. The state has flexible trust and tax laws, so trusts established in Delaware benefit from tax savings, asset protection, investment flexibility, greater control over terms, and quick, confidential judicial settlements.

UMB offers Delaware Statutory Trust services through its subsidiary UMB Delaware Inc. in Wilmington, Delaware. For more information, contact UMB’s Delaware Trust Services.

To learn more about the ABS industry, read this helpful UMB blog on the role of an indenture trustee in an ABS deal.

An escrow agent is a person or entity that holds property in trust for a third party while a transaction is finalized or a disagreement is resolved. Typically, a financial institution provides the escrow agent services and can hold assets, invest funds, handle tax reporting and manage distributions on behalf of the organization it represents.

An ideal escrow agent has a comprehensive team of advisors working on behalf of its client. This includes in-house attorneys and a specialized relationship managers experienced in a broad range of corporate transactions, including mergers and acquisitions, capital raise or litigation settlements.

UMB is a nationally recognized and ranked provider of corporate trust and escrow services. For more information, please contact a UMB Corporate Trust representative.

A paying agent collects and distributes the principal and interest payments on the bonds. Unlike a trustee, a paying agent doesn’t have the ability to enforce the bond payment obligations. If there’s a paying agent but no bond trustee, there’s no independent party available to protect the rights of the bondholders if there is a default on the bonds.

To continue learning about the role of paying agents, read “Defining the role of a bond trustee or paying agent.”