3 Tiered Securitization Structure

swarnendupathak
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3 Tiered Securitization Structure

Postby swarnendupathak » Sat Nov 02, 2013 7:51 pm

In the 3 tier securitization structure there would be Senior tranch, mezanine tranch & equity tranch. Suppose there are enough cash-flow received (say A) from the underline security to pay off the interest to Senior (B) & Mezanine tranch (C) holder & remaining amount of (A-B-C) say K, So, here my question is the remaining amount of K would go first to equity holder or it would be transferred to trust account?? or it is the other way that K will go to equity first then the excess amount remained after paying the equity would go to the trust account??

swarnendupathak
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Posts: 119
Joined: Mon Sep 17, 2012 11:06 am

3 Tiered Securitization Structure

Postby swarnendupathak » Wed Nov 06, 2013 11:16 am

Pristine... please reply

pradeeppdy
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3 Tiered Securitization Structure

Postby pradeeppdy » Thu Nov 14, 2013 5:02 am

Hi,
The trust account (which is the same as the o/c account I think) is funded first from any positive excess spread. Equity holders are last in the queue.
There is some max amount that can be set aside into the trust account using funds from the excess spread, call it M, so that if you can fully pay M into the trust account using the excess spread (so K > M), only then do equity holders get what's left.

Hope it helps.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

3 Tiered Securitization Structure

Postby pradeeppdy » Sat Apr 05, 2014 9:16 am

The remaining amount after paying to trust account will go to the equity a/c.


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