Criterion A1: Nature of Assets (Transaction Level)
| No: 44047144 | Date(g): 27/12/2022 | Date(h): 4/6/1444 | Status: In-Force |
Effective from Jan 01 2023 - Dec 31 2022
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| 18.100 | The assets underlying a transaction in a conduit should be credit claims or receivables that are homogeneous, in terms of asset type.93 The assets underlying each individual transaction in a conduit should not be composed of “securitization exposures” as defined in 18.4. Credit claims or receivables underlying a transaction in a conduit should have contractually identified periodic payment streams relating to rental,94 principal, interest, or principal and interest payments. Credit claims or receivables generating a single payment stream would equally qualify as eligible. Any referenced interest payments or discount rates should be based on commonly encountered market interest rates,95 but should not reference complex or complicated formulae or exotic derivatives.96 | |||
93 For the avoidance of doubt, this criterion does not automatically exclude securitizations of equipment leases and securitizations of auto loans and leases from the short-term STC framework.
94 Payments on operating and financing lease are typically considered to be rental payments rather than payments of principal and interest.
95 Commonly encountered market interest rates may include rates reflective of a lender’s cost of funds, to the extent sufficient data is provided to the sponsors to allow them to assess their relation to other market rates.
96 The Global Association of Risk Professionals defines an exotic instrument as a financial asset or instrument with features making it more complex than simpler, plain vanilla, products.