medium · Debt Capital Markets
Which of the following describes 'Excess Spread' in the context of a securitization structure?
- The extra yield paid to investors for buying a 'labeled' ESG bond versus a conventional bond.
- The difference between the interest collected from the assets and the interest paid to the debt tranches and fees.
- The portion of the credit spread that exceeds the market-implied probability of default.
- The principal repayment that occurs when a mortgage borrower refinances their loan early.
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More Debt Capital Markets practice
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