TBA (To Be Announced)
Asset-Backed Securities glossary · Asset Backed Securities
Definition
The forward market for agency MBS pass-throughs trading on six general parameters (issuer, coupon, maturity, settlement month, par amount, price) without specific pool identification; the most liquid sector in MBS trading.
TBA (To Be Announced) in plain English
"Agency MBS pass-throughs" are bonds backed by big pools of U.S. home mortgages, where homeowners' monthly payments get passed through to investors. The TBA market lets traders buy and sell these bonds today for delivery next month without yet knowing exactly which pools they'll receive — the trade is agreed on just six general features (issuer, coupon, maturity, settlement month, size, and price), and the specific pools are "to be announced" later. It's like ordering "a dozen large Grade-A eggs" for pickup next week — you don't care which particular carton you get because they're standardized and interchangeable. Because buyers don't have to inspect specific pools, trading is fast and easy, which makes TBA the most liquid (easiest to buy and sell) corner of the mortgage bond world.
Also called: To Be Announced
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