medium · Asset-Backed Securities waterfalls
A sponsor elects to utilize a 'Discount Option' in a credit card master trust where the portfolio yield is under pressure.
What is the immediate effect of this election on the excess spread calculation?
- It reduces reported charge-offs by accelerating the recovery timeline for defaulted accounts.
- It increases the Monthly Payment Rate by encouraging cardholders to repay faster than usual.
- It increases the portfolio yield by reclassifying a portion of principal as finance charges
- It decreases the base rate calculation by lowering the required minimum servicing fee.
Sign up free to see the explanation and track your rank →
More Asset-Backed Securities waterfalls practice
- Under the stated deal mechanics, how does the ARA affect monthly interest distributions?
- Which consequence follows from that provision?
- Before liquidation, what is the direct cash-flow effect?
- Does the series enter early amortization?
- If the original pool was $1,200 million and the current balance is $115 million, can the s
- If the pool generates $6.46 million in interest and all bond tranches require $4.258 milli
- If the original balance was $1,250,000,000 and the current balance is $145,000,000, how mu
- If prepayments for the month are $6M, and Class M has a $50M balance while Class B has a