Controlled Amortization Bond

From Open Risk Manual

Definition

Controlled Amortization Bond. Bond that is securitized using a Controlled Amortization Structure. Revolving debt (primarily credit card receivables, but also HELOCs, trade receivables, dealer floor-plan loans and some leases) may be securitized using a controlled amortization structure.

This is a method of providing investors with a relatively predictable repayment schedule, even though the underlying assets are nonamortizing. Controlled-amortization ABS resemble corporate bonds with a sinking fund. After a predetermined 'revolving' period during which only interest payments are made, these securities attempt to return principal to investors in a series of defined periodic payments that usually occur over less than a year. A risk inherent in this kind of ABS is an early amortization event

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This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.

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