Resecuritization
Resecuritization is the practice of securitizing assets that have already been securitized, creating new securities whose cash flows are derived from the performance of underlying tranches of other securitized products. It often involves pooling senior or mezzanine tranches from existing securitizations or using synthetic exposures, and then issuing a fresh set of notes with its own credit structure and priorities.
Mechanically, a resecuritization is typically structured through a special purpose vehicle or trust. The SPV issues
Types of resecuritization include CDOs of CDOs (often called CDO-squared), which stack one level of securitized
Risks and criticism focus on complexity, opacity, and amplification of losses during stress periods. Rese curitization