medium · Asset-Backed Securities regulatory
An investor is comparing a 'Public' ABS (Form SF-3) to a 'Rule 144A' private placement from the same issuer.
Which of the following is a primary 'cost' the investor pays for the higher yield typically offered by the 144A bond?
- A higher risk of 'True Sale' invalidation, since private deals often skip legal opinions public deals require.
- A required minimum 10-year holding period before any secondary market sale to another qualified investor is permitted.
- The complete absence of monthly servicer reports, trustee statements, and ongoing rating agency surveillance of pool performance.
- Reduced secondary market liquidity and a narrower investor base consisting only of Qualified Institutional Buyers (QIBs).
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