Overcollateralization

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Overcollateralization

The practice or process of placing an asset as collateral on a loan where the value of the asset exceeds the value of the loan. For example, a person could pledge a farm (worth $10 million) on a loan for $5 million. Usually, however, the value of the asset only exceeds the value of the loan by 10-20%. Overcollateralization reduces the risk for the lender and improves the borrower's creditworthiness. It is used most commonly when a bond issuer wishes to improve its credit rating.
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15bn, extends the facility's maturity date to 29 June 2018, reduces the over-collateralization requirement and provides increased flexibility for AFC to offer a broader array of term structures to its dealer customers.
With respect to more speculative streams of income, use of over-collateralization techniques permit the inclusion of properties such as multi-tenanted office buildings and hotels.
However the transaction's structure allows for senior classes to establish over-collateralization which provides additional credit protection.
In addition, the transaction benefits from a reserve account ($2,468,240), over-collateralization ($2,563,419), and expected booked residual realizations.
20% initial and target over-collateralization (OC) and the benefit of monthly excess cash flow to absorb losses.
The over-collateralization (OC) ratios of all classes have remained the same since close while the interest coverage (IC) ratios have improved over the same period.
00% privately offered, non-rated class B-3 and over-collateralization (OC).
The upgrades are the result of increased over-collateralization (OC) and increased credit enhancement due to the deleveraging of the senior credit facility.
Based on the diversity of the fund's portfolio, the cushion of the over-collateralization tests, the conservative valuation of the semi-liquid and illiquid investments and the experience of GTCP in the high-yield loan, mezzanine and special situation asset classes, Fitch affirms all of the rated liabilities issued by GoldenTree High Yield Opportunities II, L.
90% initial over-collateralization (OC), and the 5.
In the US, the impact of any AFC shortfalls within a synthetic CDO would most likely felt by equity holders or junior classes in the form of reduced returns while credit enhancement in the form of over-collateralization typically would be unaffected.
Over-collateralization tests have also remained stable at passing levels for each class.