easy · Asset-Backed Securities asset-nuances
A BNPL (Buy-Now-Pay-Later) ABS pool has a typical loan duration of 6 to 8 weeks.
How does this short duration affect the structure's 'Weighted Average Life' (WAL) if it is an amortizing deal?
- The WAL will be 2 years to match the revolving period.
- The WAL will be extremely short, likely under 0.2 years.
- The WAL is fixed at 1.0 years by SEC Regulation AB II.
- The WAL will be long because borrowers frequently default on small amounts.
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