hard · Asset-Backed Securities
In a 'step-up' OC structure, the target OC is 2.00% for months 1-12 and increases to 4.00% after month 12.
If a deal starts with 1.00% initial OC and has reached its 2.00% target by month 8, what happens to excess spread in months 9, 10, and 11?
- It continues to be trapped to reach the future 4.00% target early
- It is released to the residual holder
- It is deposited into the reserve account until month 12
- It is used to pay down the senior bonds pro-rata
Sign up free to see the explanation and track your rank →
More Asset-Backed Securities practice
- Which vehicle was specifically created by the Tax Reform Act of 1986 for this asset class?
- What is the most likely tax structure?
- Given the real estate collateral, which tax vehicle is standard for this multi-class trans
- An originator transfers auto loans to a bankruptcy-remote in… — What is the economic purpo
- Under ASC 860, which condition must be met for a transfer of receivables from an originato
- Why does it covenant NOT to incur additional debt?
- A CLO manager is actively buying and selling senior secured… — Which phase of the transact
- An analyst observes that a Non-agency Senior RMBS bond with… — How should the credit decom