These techniques have facilitated the rapid development of markets for syndicated loans, ABSs, and small-value business loans based on scoring models, as well as markets for non-recourse loans and credit derivatives.
When arranging ABSs, these techniques enable the classification of cash flows from pooled assets into tranches, such as senior, mezzanine, and equity, reflecting different degrees of risks, enabling investors to select the tranche best suited to their individual risk preferences.