Overcollateralization

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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84% from 8% at close and is provided by a combination of subordination, overcollateralization, and a variable funding certificate.
08 million outstanding in aggregate) are being downgraded due to monthly losses which have generally exceeded excess spread and caused deterioration in the overcollateralization (OC) amount.
Additionally, the 2006-B securitization incorporates a yield supplement overcollateralization (YSOC) amount that compensates for receivables in the pool with interest rates below 8.
The long-term rating assigned to these bonds reflects the indenture's security provisions, strong credit quality of the existing collateral and related credit enhancements, adequacy of projected revenues to pay debt service, availability of a debt service reserve account and overcollateralization requirement fund (OCR), and strong management capabilities in combination with the financial strength of the corporation.
Before drawing upon the insurance policy, losses will be covered by excess spread, overcollateralization (OC), and a spread account.
The trust, seasoned 11 months, has a growing overcollateralization (OC) structure which relies on the remaining excess spread after losses to build the OC to the target amount.
As in recent 2005 DCAT transactions, 2006-B incorporates a yield supplement overcollateralization amount (YSOA), which effectively creates synthetic yield by boosting the weighted average (WA) APR of the collateral pool from 7.
90% credit enhancement in the form of subordination and overcollateralization, and excess spread overtime.
The additional bonds test and GGRT overcollateralization are crucial to the bonds' rating, since NMFA's mission focuses on lending to small entities lacking strong credit characteristics.
As in recent 2005 DCAT transactions, 2006-B incorporates a yield supplement overcollateralization account (YSOA), which effectively creates synthetic yield by boosting the weighted average (WA) APR of the collateral pool from 7.
Fitch's ratings on the notes are based upon their respective levels of subordination; the specified credit enhancement amount, which consists of funds in the reserve account, overcollateralization; and the yield supplement overcollateralization amount (YSOA).
Fitch's expected ratings on the notes are based upon their respective levels of subordination, the specified credit enhancement amount, which consists of funds in the reserve account, overcollateralization (OC), and the yield supplement overcollateralization amount (YSOA).