Early Amortization

Early Amortization

Early repayment of an asset-backed security, usually occurring when something goes wrong. Most commonly, if there are more than a certain number of defaults on the assets (such as mortgages) underlying the security, early amortization occurs. It is intended to reduce the risk to the investor and therefore to entice buyers.
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Additionally, structural features such as early amortization triggers mitigate risks of dealer defaults or manufacturer bankruptcies.
assessing a risk-based capital charge to reflect the risks in securitizations with early amortization provisions that are backed by revolving retail exposures.
15 times (x) required to trigger an Early Amortization Event, which would require all excess cash after paying debt service and certain transaction expenses be applied toward prepayment of principal on the notes.
Stable Performance Metrics: Monthly payment rates (MPRs) have been stable since 2010 and well above trigger levels, which dictate incremental increases in credit enhancement (CE) and early amortization upon breach.
Covenants in asset-securitization contracts that are linked to supervisory thresholds or adverse supervisory actions that are triggers for early amortization events or the transfer of servicing.
The downgrade reflects significant deterioration in profitability and portfolio credit quality and the heightened risk of breaching early amortization triggers on off-balance sheet ABS transactions, which could lead to a possible shut-down of the business.
An interagency advisory issued May 23, 2002, on covenants in asset-securitization contracts that are linked to supervisory thresholds or adverse supervisory actions as triggers for early amortization events or the transfer of servicing.
s underwriting and servicing capabilities, as well as the transaction's legal structures, which employ early amortization triggers.
For the quarter ending in November 2008, data indicates that this ratio per the Indenture was below the level required to trigger an Early Amortization Event.
Notes issued from the Citibank Omni Master Trust benefit from a standard structural feature, known as early amortization events, which protects investors from deterioration in collateral, seller insolvency or servicer default by triggering early redemption and/or acceleration.
Additionally, investors are protected from deterioration in asset quality, seller insolvency or servicer default by early amortization triggers.
The ratings on the notes are based on the quality of the underlying pool of receivables, available credit enhancement, sound legal and cash flow structures including early amortization triggers, and dealer and asset overconcentration limits.
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