easy · Asset-Backed Securities
In a 'Grantor Trust' auto ABS structure, what is the key limitation regarding the capital stack?
- It generally cannot feature multiple classes with different principal payment priorities (no sequential tranching).
- It must be consolidated on the originator's balance sheet under all circumstances.
- It is prohibited from using any form of external credit enhancement like a surety bond.
- It is not allowed to hold loans with terms longer than 36 months.
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