Revolving period
Asset-Backed Securities glossary · Asset Specific Nuances
Definition
In a trust backed by revolving receivables (credit cards, trade receivables, healthcare receivables), the period during which collections are used to purchase new receivables rather than amortize bonds.
Revolving period in plain English
Some pools are backed by loans that constantly get paid off and re-borrowed — like credit cards, where people pay their balance down and then charge new stuff. During the revolving period, instead of using the money customers pay back to pay down the bonds, the deal spends it buying fresh new receivables to keep the pool topped up at a steady size. The point is to give investors a nice long stretch of stable interest payments before the pool eventually starts winding down. It's like a fruit stand that keeps restocking with new apples as old ones sell, so the shelf always looks full instead of slowly emptying out.
Related Asset-Backed Securities terms
Asset-Backed Securities practice questions · Asset-Backed Securities flashcards · Asset-Backed Securities study guide