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.

References in periodicals archive ?

84% from 8% at close and is provided by a combination of subordination, overcollateralization, and a variable funding certificate.

Fitch Upgrades 3 Classes from 2 GE Corporate Aircraft Finance Transactions

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.

Fitch Affirms 18, Downgrades 6 & Places 3 on Rating Watch Negative from 3 Ameriquest Issues

Additionally, the 2006-B securitization incorporates a yield supplement overcollateralization (YSOC) amount that compensates for receivables in the pool with interest rates below 8.

Fitch Expects to Rate Hyundai Auto Receivables Trust 2006-B

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.

Fitch Rates Alaska Housing Finance Corp.'s $190MM 2006 Collateralized Bonds 'AAA'

Before drawing upon the insurance policy, losses will be covered by excess spread, overcollateralization (OC), and a spread account.

Fitch Rates AmeriCredit Automobile Receivables Trust 2006-A-F, 'F1+'/'AAA'

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.

Fitch Affirms 14 Classes from Countrywide Asset-Backed Ctfs, Series 2005-BC3

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.

Fitch Rates DaimlerChrysler Auto Trust 2006-B 'F1+/AAA/A+'

90% credit enhancement in the form of subordination and overcollateralization, and excess spread overtime.

Fitch Rates PHEAA Student Loan Revenue Bonds

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.

Fitch Rates New Mexico Finance Auth Senior Lien PPRF Revs 'AA'

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 Expects to Rate DaimlerChrysler Auto Trust 2006-B 'F1+/AAA/A+'

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 Ratings Rates Hyundai Auto Receivables Trust 2006-A

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).