Also known as CDS of ABS, a credit default swap in which the reference obligation is an asset-backed security. These trades are documented using standards different from corporate (or financial) credit default swaps. In most cases they use pay-as-you-go settlement and include credit events such as principal writedown. Unlike most corporate credit default swaps, asset-backed credit default swaps reference a particular class of notes from a particular ABS issuer rather than a reference entity. Other differences are that the notional of asset-backed credit default swaps can be reduced during the life of the trade as the reference asset amortises, and the fact that payments are exchanged monthly rather than every quarter. To date, most asset-backed credit default swaps have been written on tranches of US sub-prime residential mortgage securitisations.