STS Criterion 12. At least one payment made

Description

At least one payment made

Content

The debtors should, at the time of inclusion of the respective exposures in the securitisation, have made at least one payment. This is with exception of revolving securitisations backed by exposures payable in a single instalment or having a maturity of less than one year, including without limitation monthly payments on revolving credits.

Rationale

See overarching rationale for consistency with traditional qualifying framework.

STS synthetic securitisation should minimise the extent to which investors are required to analyse and assess fraud and operational risk. At least one payment should therefore be made by each underlying borrower at the time of inclusion of the respective exposure in the securitisation, since this reduces the likelihood of the exposure being subject to fraud or operational issues, unless in case of revolving securitisations in which the distribution of underlying exposures is subject to constant changes because the securitisation relates to exposures payable in single instalment or with an initial legal maturity of an exposures of below one year.

Examples of exposures to which the requirement of at least one payment being made at the time of inclusion of the exposures in the securitisation does not apply should include: personal overdraft facilities, credit card receivables, trade receivables, trade finance obligations and dealer floorplan finance loans.

Issues and Challenges

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