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28 Sep 2019
Please discuss all questions and show work if necessary. Thank you
A corporation is considering a securitization and is considering two possible credit enhancement structures backed by a pool of automobile loans. Total principal value underlying the asset-backed security is $300 million
Principal Value for: Structure I Structure II Pool of automobile loans $304 million $301 million Senior Class $250 million $270 million Subordinated Class $50 million $30 million
(a) which structure would receive a higher credit rating and why?
(b) what forms of credit enhancement are being used in both structures?
Please discuss all questions and show work if necessary. Thank you
A corporation is considering a securitization and is considering two possible credit enhancement structures backed by a pool of automobile loans. Total principal value underlying the asset-backed security is $300 million
| Principal Value for: | Structure I | Structure II |
| Pool of automobile loans | $304 million | $301 million |
| Senior Class | $250 million | $270 million |
| Subordinated Class | $50 million | $30 million |
(a) which structure would receive a higher credit rating and why?
(b) what forms of credit enhancement are being used in both structures?
Lelia LubowitzLv2
28 Sep 2019