easy · Asset-Backed Securities collateral
In an auto ABS waterfall, where is 'Excess Spread' generally applied first when a net loss occurs?
- To pay down principal owed on the senior-most bond class.
- To pay the trustee's routine monthly servicing and admin fees.
- To cover the loss and prevent a draw on hard credit enhancement.
- To pay discretionary residual cash flow to the deal's equity sponsor.
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