medium · Asset-Backed Securities
In an ABS true-sale and bankruptcy-remoteness analysis, what principal bondholder protection does the structure seek to provide, subject to the transaction documents, governing law, and legal opinion assumptions?
- It eliminates borrower defaults and bankruptcies within the collateral pool after closing
- It reduces the risk that transferred assets enter the originator's bankruptcy estate
- It makes rating agencies legally responsible for any principal or interest loss
- It guarantees identical federal and state tax treatment for every transaction vehicle
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