Growing investor confidence spurred banks, specialty finance companies, and other businesses to issue a record amount of asset-backed securities in 1996.

About $148 billion worth of asset-backed securities were offered this year, according to Securities Data Co., up from $119 billion in 1995. The growth is striking, considering the market for these investments is barely 10 years old.

"Investors are getting comfortable with the market," said David Howard, senior director at Fitch Investors Service, a rating agency. "It's no longer new, esoteric, scary structured finance."

Asset-backed securitizations occur when a company assembles a group of similar assets on its books - such as credit-card receivables - and then pitches the package to investors. Issuers get their money right away, and buyers collect the principal plus some interest on what's considered a reliable investment.

Banks have been active issuers of asset-backed securities since the early 1990s, when they needed cheap sources of funding. This year, commercial banks issued $15.1 billion worth of these bonds.

Although just about any asset can be securitized, banks have historically offered investors blocks of credit-card receivables, auto loans, home equity loans, and student loans. This year, corporate loans joined the fray, as the United Kingdom's National Westminster Bank issued securities backed by $5 billion worth of corporate credits. The deal - the largest securitization ever - is expected to be copied by other banks.

"Banks have clearly started to use asset-backed securitization as a funding tool," said William J. Haley, a managing director at Chase Securities. "It has started to compare favorably to other funding options they have, including bank notes, deposits, and medium-term notes."

Securitization is especially important for credit-card specialists such as MBNA Corp., and specialty financiers, like Money Store, that can't rely on deposits for funding. "We do in excess of a dozen securitizations a year," said Michael Benoff, senior vice president at Money Store, a Union, N.J.-based finance company.

This year, asset-backed issues were also used to finance an active mergers and acquisitions market. AT&T Capital Corp., for instance, securitized $3 billion worth of equipment leases to finance its spinoff from AT&T Corp.

The magic of securitization is that it allows buyers to get what are usually AAA-rated investments even if the underlying assets are less creditworthy. The most common buyers are insurance companies and money market funds, although the Office of the Comptroller of the Currency recently increased how much asset-backed securities banks can buy.

Offerings are ordinarily insured against portfolio deterioration. And credit rating agencies stress-test portfolios to ensure they can withstand economic downturns before they are sold.

As the market has grown, securitization has become a game almost anybody can play. New asset classes offered on the market this year included tax liens, unsold airline tickets, and anticipated revenues from David Bowie's future record sales.

"The saying used to be that if it had cash flow, it could be securitized," said Fitch's Mr. Howard, "but you don't even need cash flow anymore."

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