hard · Asset-Backed Securities

Which requirement is the genuinely binding structural constraint that distinguishes a master-trust add-on series from a standalone ABS issuance?

1. The new series may be issued only if, after giving effect to it, the transferor (seller's) interest still meets its minimum percentage and the rating agency condition confirms existing series' ratings are not downgraded, because all series share collateral and a new series cannot dilute the credit support of outstanding series.
2. The new series may be issued freely so long as it is rated at least as highly as the most senior outstanding series, because senior-most rating parity is the only master-trust gating test.
3. The new series requires 100% consent of existing series' noteholders, since adding a series to a shared pool legally subordinates their claims and triggers a unanimous-amendment provision.
4. The new series must be collateralized by a carved-out, segregated sub-pool of newly added receivables so it has no claim on the receivables backing existing series, eliminating any cross-series dilution concern.

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