medium · Asset-Backed Securities waterfalls
In a healthcare receivables revolving facility, the 'Net Collection Ratio' trigger fires if collections fall below 92% of the expected Net Realizable Value (NRV).
If the expected NRV for a month is $30 million but actual collections are $27 million, what is the immediate structural consequence?
- The advance rate is automatically raised to 95% so the provider can access more liquidity right away.
- The provider must repurchase the full $30 million pool and replace it entirely with fresh eligible receivables.
- Early amortization is triggered, ending the revolving period and directing all collections to bond principal.
- The $3 million shortfall is simply 'written off' directly against the Class A senior principal balance.
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