easy · Asset-Backed Securities abs-core
Why is 'Bankruptcy Remoteness' a core requirement for an ABS Special Purpose Entity (SPE)?
- To allow the originator to reclaim the pool's assets if its own credit rating later improves.
- To guarantee that none of the underlying pool's borrowers will ever default on their loans.
- To prevent the SPE from ever having to pay bondholders any interest at all during a severe market downturn.
- To ensure that the insolvency of the originator does not allow creditors to seize the pool's assets.
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