Investors are turning to more exotic asset-backed securities that are riskier but offer better returns. ABS backed by student, automobile and credit-card loans have plunged 81% in the past year, according to Citigroup, while so-called “off-the-run” bonds backed by timber harvests, timeshare revenue and cell phone-tower lease and the like, are beginning to attract more investors, though they still represent a tiny share of the market. The exotic ABS offer yields of in the 5% to 6% range, compared with 3% for traditional ABS.
