medium · Asset-Backed Securities waterfalls

A prime auto loan ABS transaction, 'Autumn Finance 2026-A', utilizes a standard sequential-pay structure.

If the pool experiences $15 million in total principal collections (scheduled and prepayments) and the current tranche balances are Class A-1: $10 million, Class A-2: $100 million, and Class B: $20 million, how is the principal distributed?

  1. Class A-1 receives $10 million, Class A-2 receives $5 million, and Class B receives $0.
  2. Class A-1 receives $1.15 million, Class A-2 receives $11.54 million, and Class B receives $2.31 million.
  3. Class A-1 receives $10 million, Class A-2 receives $0, and Class B receives $5 million.
  4. Each class receives $5 million regardless of seniority.

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