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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was in compliance with all of its over-collateralization tests as of the January 4, 2010 determination date for the CLO, reflecting an improvement from September 30, 2009, when both KKR Financial CLO 2007-A, Ltd.
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.
As previously announced, the IndyMac deferral triggered the over-collateralization tests in five of these eight CDOs.
In addition, the transaction benefits from a reserve account ($2,468,240), over-collateralization ($2,563,419), and expected booked residual realizations.
IMB's deferral will trigger the failure of over-collateralization tests in five of the eight CDOs for a period of time, of which one is expected to be a partial failure that should cure in the current period.
20% initial and target over-collateralization (OC) and the benefit of monthly excess cash flow to absorb losses.
AFN currently expects that IMB's deferral will trigger the over-collateralization tests in five of the eight CDOs for a period of time.
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.
5 million from the release of over-collateralization proceeds related to the Encore Credit Receivables Trust 2005-1.
All other rated classes in the above-mentioned series are not affected by this action since their credit enhancement is provided solely by subordination and over-collateralization.
Should losses exceed the monthly excess interest, the difference is then directed to reduce over-collateralization.