Friday, January 30, 2009

solution to Strcuture Finance - from Creditsights

problems of current SF --opaque --misaligned incentive solutions covered bond backed by mortgages assets vs ABS --Assets stay in originators' balance sheet not in SPE (for ABS) so the incentives of originators and issuers are aligned, won't reduce originators' regulatory capital, the loss of bonds can recourse to originators. Also incentives are aligned --no tanching like ABS, no prepayment because prepaid asset/collateral will be replace

No comments: