A credit default swap on a mortgage-backed security or an asset-backed security. That means the reference obligation in such a swap is a structured security that pools a set of mortgage loans or assets. The buyer of this swap is the party who seeks protection for defaults on asset-backed or mortgage-backed securities or tranches thereof. Trades of asset-backed credit default swaps (ABCDS) are typically documented using standards different from those used to document normal credit default swaps. In most cases, the pay-as-you-go (PAUG) settlement is used, and for different credit events such as principal writedown. Furthermore, the notional of asset-backed credit default swaps can be reduced during the life of the trade as the reference asset amortizes, where payments are exchanged every month rather than quarterly.

This swap is also known as credit default swap (CDS) of ABS.