medium · Asset-Backed Securities waterfalls
In a healthcare receivables ABS, what is the primary reason the 'Advance Rate' (e.g., 80% of eligible receivables) serves as credit enhancement?
- It functions as a surety bond effectively provided to the trust by a third-party monoline insurer.
- It creates immediate Overcollateralization because the trust owns more assets than the debt it issued.
- It guarantees outright that the healthcare provider originating the receivables will never file for bankruptcy.
- It contractually forces the insurance payer to remit claims to the trust within thirty days of billing.
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