medium · Asset-Backed Securities asset-nuances

What is the consequence if the 'Seller's Interest' falls below a specified minimum threshold (e.g., 5% of the invested amount)?

1. The trust is automatically converted into a static auto loan ABS.
2. It typically triggers an early amortization event to protect bondholders.
3. The cardholders are granted a credit limit increase to help grow the pool back to size.
4. The originator is awarded a bonus for managing a very 'efficient' trust.

Sign up free to see the explanation and track your rank →