These securities were often sold in tranches that offered varying degrees of protection from the default risk involved.
These structures allowed higher-  BIS Review 106/2007  1  risk assets to take on the qualities of lower-risk assets, and this fuelled the demand for the creation of higher-risk assets, which led to a global decline in standards for mortgage loans and the emergence of bonds with weaker covenants. Further, some of these assets embedded significant leverage.