medium · Debt Capital Markets bond-instruments-structures
In the context of a CLO (Collateralized Loan Obligation) waterfall, what is the primary function of an OC (Over-collateralization) test?
- To measure the interest coverage of the underlying loan portfolio relative to total debt.
- To allow the collateral manager to trade out of distressed assets without restriction.
- To divert cash flow to amortize senior tranches if collateral value falls below a threshold.
- To increase the dividend yield of the equity tranche during periods of low defaults.
Sign up free to see the explanation and track your rank →
More Debt Capital Markets bond-instruments-structures practice
- If a company has a leverage-based pricing grid and SOFR rises significantly while leverage
- What is meant by the 'bond floor' in the context of yield analysis?
- What is a 'call schedule' for a corporate bond?
- Which of the following describes a 'step-up' coupon in a callable bond?
- What is a 'deferred call'?
- What does a 5-year bond described as 'NC2' signify regarding its call protection?
- A 'make-whole' call differs from a standard 'fixed-price' call because the redemption pric
- If a bond has a 'Par Call' feature starting 6 months before maturity, what does this mean?