medium · Asset-Backed Securities tranching
In a 'Sequential-Pay' waterfall, Class A must be fully retired before Class B receives any principal. This structural rule primarily ensures that:
- The senior-most bond has the shortest possible weighted average life (WAL)
- The Class B bondholders receive a materially higher coupon rate than A
- The subordinate bonds receive all of the pool's remaining monthly excess spread
- The pool's cumulative net losses are capped at closing by the sponsor
Sign up free to see the explanation and track your rank →
More Asset-Backed Securities tranching practice
- If the B-Piece represents the bottom 5% of the capital stack, what is the impact on the B-
- If they also assume a 15% increase in total losses due to front-loaded timing stress, what
- A Home Equity Loan (HEL) ABS structure uses 'Shifting Intere… — What is the primary purpos
- What is the required hard credit enhancement?
- What is the immediate impact on the AAA rated Class A bondholders?
- What is the total initial credit support percentage for the Class A bonds?
- If the structure includes 8.0% in hard credit enhancement and expects 12.0% in lifetime ex
- During a 36-month lockout period, 100% of prepayments are directed to Class A. If the pool