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1 | Research conductedby Arthur Mboue
Players (type) Contractual duties Item
number
or form
Basic disclosure Required documents Detailed Content
Originator/sponsors
(mostly large
financial
institutions,
commercial
enterprises, big real
estatecompanies &
mediumsized
enterprises)
Thisentity initiatesthe
securitizationprogramfor
lowercostsof borrowing,
alternative source of
borrowingandaccelerate cash
receipts
1104,
prospect
us,form
abs 15-G,
prospect
us
Provide the following
informationaboutthe sponsor
 State the sponsor’sname
and describe the sponsor’s
formof organization
 Describe the general
character of the sponsor’s
business
 Securitizationprogram
o General discussion
regardingassetsof
any type
o Detaileddiscussion
regardingassets of
the type being
securitized
o Size,composition
and growthof
relevantasset
portfolio
o Otherinformation
material toanalysis
of the pool asset,
such as prior
securitization,early
amortizationor
defaults
 Describe the sponsor’s
material rolesand
responsibilitiesinits
securitizationprogram
 If applicable,disclose pool
assetsrepurchase activityfor
all of the sponsor’s
securitization
 Agreementtotransfer
the receivables
 Assetpurchase & sale
agreementorloan
(consignment/pledge)
agreement
 Agreementstoprovide
creditenhancementor
liquiditysupport(if
applicable)
 Clean-upagreement
 Servicingagreement(if it
alsoacts as a servicer)
 Must be clear
 Containsrepresentations,
warrantiesandany criteria
the receivablesmustsatisfy
 The SPV’srecourse andrights
againstthe originatorfor
breachof representation,,
warrantyor contractual
termsby the originator
 Originator’sobligationto
repurchase anyreceivable
not eligible atthe
representation
 If the originatoralsoactsas a
servicer,itwill be aprovision
givingthe rightto the
originatortopurchase all the
remainingsecuritieswhenit
reachesa certainlevel
2 | Research conductedby Arthur Mboue
Debtor (anytype of
customersof the
originator-each
personliable forthe
full orpartial
paymentor
performance of any
loanor debt
whethersuch
personisobligated
directly, indirectly,
primarily,
secondarily,jointly
or severally)
Theyare the originator’s
obligors. Theircreditscores
and historicpayment
experience are nucleustoa
successof the full ABS
program. Theydo notneedto
be notifiedof,consenttothe
transferof the receivables
because theyare not
participatingpartiesinthe
securitizationprogram.
Estimate of lossesor
allowance forlossesrequires
considerationof historical loss
experience adjustedfor
currentconditionand
judgmentsaboutthe probable
effectsof relevantobservable
data includingpresent
economicconditionssuchas
delinquencyratesforhealthof
specificcustomersandmarket
sectors,collateral valuesand
the presentandexpected
future levelsof interestrates.
The underlyingassumptions,
estimatesandassessments
usedto provide forlossesare
updatedperiodicallytoreflect
currentconditions. These
assessmentsare subjectto
regulatoryexaminations
whichcan resultinchange to
these assumptionsorworse.
1112,
prospect
us,FWP,
10-D, 10-
K
 Provide informationabout
each significantobligorand
the nature of the obligation
 For obligorsthatare notABS
issuers,provide information
o Summaryfinancial
informationfor10%
obligors
o Auditedfinancial
statementfor20%
obligors
 If the obligorisAnissuing
entityof ABS:the discussion
requirementunderitems
1104, 1115, 1117, and 1119
of RegAB applied
 Bill
 Sale notice orsale
agreement
 Lease or rentcontracts
 Itemnumber
 Warranty duration of buyer
 Price agreedon
 AgreedInstallationpayments
Investors(financial
institutions,
insurance
companies,pension
 Purchase the securities
issuedbythe SPV
 Receive interestand
principal paymentsfrom
Prospect
us,1111
 To enhance theirknowledge
of the ABSbefore any
investment,investorswould
alsorelyon
 Securitypurchase
agreement
 Securitytrustdeed
(certificate)
 Index of stockpurchase
agreement
o Definition
o Sale and purchase of
3 | Research conductedby Arthur Mboue
funds,hedgefund
and wealthy
individuals)
the payingagentas
scheduled
o State of Pool assets
o Tax matters
o Legal proceedings
Pool assets:
 Describe the pool assetswith
a tabular representationof
average pool tosales,
average balance,weighted
average coupon,average
age,remainingterm,average
loanto value or simple ratio
and weightedaverage
standardizedcreditscore or
otherapplicable measureof
obligorcreditquality
o Describe the typesof
pool assetsto be
securitized
o Describe material
termsof the pool
assets
o Describe solicitation,
creditgranting
o Provide the method
and criteriabywhich
the pool assetswere
selectedforthe
transactions
o The cut-off rate or
similardate for
establishingthe
compositionof the
assetpool,if
applicable
o Identifybrieflylegal
and regulatory
provisions
o Provide the nature
 Stock certificates
 Offeringmemorandum
 Investorqualification
questionnaire (forPPM)
 Subscriptionagreement
 Agreementtobecome a
party to shareholders
shares
o Representationand
warrantiesof seller
o Representationand
warrantyof buyer
o Certaincovenants
o Conditions
precedent
o Terminationpolicies
o Indemnification
4 | Research conductedby Arthur Mboue
of the reviewof the
assetsperformedby
an issueror sponsor
o Disclose whichentity
determinesthat
those assetsshould
be includedinthe
pool despite
o Provide atabular
presentationof the
pool asset
characteristics
Chosenby the sponsorofthe program
Arranger/structurer
(financial
institution)
 Designthe structure of
the program
 Designthe structure of
the riskprofile of the
receivablesinorderto
create tranchesand their
sequentialpayments
schedules
 Designa creditarbitrage
strategy
 Arrangescredit
enhancement
 Designa liquid strategy
 Designa profitextraction
method
 List andmake
arrangementof
counterpartiestotake on
risks
 Ensuresthat the
transactionproceeds
througheach step is
closed
 Make agreementwithfirst
buyersof the securities
prospectus  Disclose the arrangername
and itsformof
organization
 Describe the characterof
the arranger business
 Describe the arranger
material rolesand
responsibilitiesinits
securitization
 Disclose the arranger
relevantfactsits
participationinstructuring
the transactions
 Disclose the arrangerother
informationincludingthe
size,type andgrowth
 Disclose the arranger’s
experience andthe period
of time thatthe arranger
has beenengagedinthe
securitization
 Subscriptionagreement
 Agreementbetweenthe
corporationand
investmentbankers
 Agreementamong
bankers
 Agreementsbetween
investmentbankersand
underwriters,dealersor
QIB
 Offeringmemorandum,
prospectus(offering
circular)
 Purchase agreement
betweenthe company
and the initial purchasers
 Legal opinionsand
 Comfortletters
 Provisionsrelatedtothe
initial purchase price forthe
securitiesonthe issue date,
subjecttoconditionsrelating
to
o The SPV’slegal status
o Listingandrating of
the securities
 Provisionrequiringa
cancellationof asale to
investorsif amaterial
adverse eventoccurs
betweensigningthe
subscriptionagreementand
closingthe securitiesissue
5 | Research conductedby Arthur Mboue
Underwriter
Managers (financial
institution)
 Exercise agreementas
firstbuyerof the
securities
 If it is a PPM, select
qualifiedinvestors
 Market the securitiesto
the investors,brokersand
qualifiedbuyers
prospectus  Indicate the underwriter
name and addressand
telephonenumberof its
registeredoffice
 Describe the characterof
itsbusiness
 List all the typesof
underwritersinvolvedin
thissecuritizationandtheir
duties
 Describe the permissible
activitiesandrestrictions
on the activities
 Disclose the total amount
of feestobe paid
 Provide informationabout
originator’sunderwriting
criteriaforthe assettypes
 Disclose the anticipated
schedule forthe offering
and descriptionof market
events
 Describe the procedures
by whichthe underwriter
will conductthe offering
and the proceduresfor
transactionsinconnection
withthe offeringwithan
underwriterand
participatingdealer
 Agreementbetweenthe
sponsorand
underwriters
 Agreementbetweenthe
underwritersanddealers
 Provide information
aboutoriginator’s
u8nderwritingcriteriafor
the assettypes
 Disclose the anticipated
schedule forthe offering
and descriptionof
material events
 Describe the procedures
by whichthe
underwritingwill
conduct the offeringand
the proceduresfor
transactionin
connectionwiththe
offeringwithan
underwritingor
participatingdealers
 Agreementamong
underwriters(AAU)
 Underwriters
questionnaire and
responses
 Numberandtype of
securitieseachmanagerhas
agreedto buy
 Paymentandallocationof
the managers’commission
 Delegatespowertothe
arranger/leadmanagertoact
on behalf of the syndicate
Auditors
(Accountingfirms,
mostlybig4, kpmg,
PWC, Ernst & Young
and Deloitte)
 Provide confirmationof
financial informationin
relationtothe SPV,and
any guarantors,andthe
receivablesthemselves
 Involvedinthe latestaudit
reportand financial
statementsof the vehicle
 Provide the name of the
auditingfirm
 Describe itsmaterial role
and responsibilitiesinthe
securitization
 Provide the general
character of its business
and itsactions
 Auditingagreement
 Discussionwiththe
independentauditor
report
 Reportfrom
management
 Comfortletters
 Addressedtounderwriter
managers
o 1st
at the time of
signingof
subscription
agreement
o 2nd
justbefore
completion
6 | Research conductedby Arthur Mboue
 For newlyincorporated
SPV, reporton itsposition
immediatelyfollowingthe
securitization
 Provide the due diligence
results(change ornot)
 Carry-outthe financial
modelingof the cashflows
 Conductand disclose the
resultsof financial analysis
of the collateral
 File the required reportto
be includedinthe offering
and disclosure documents
 Disclose the auditorreport
 Disclose if auditoropinion
isunqualified,qualified,
adverse ordisclaimer
 Provide fees,directand
indirectandall the
engagementtobe paid
(fee andexpensestable)
 It mustbe dated,signed
and state of certificationof
the leadauditoror firm
 SAS59 requiresauditorto
evaluate goingconcernfora
reasonable time with
explanationparagraphif
neededtoenhance
managers’knowledge
o Discussthe degree of
independenceof the
auditorand auditor’s
consentduringthis
assessment
o State reasonsfor the
offering
o Confirmsthe
reliabilityof the
unauditedfinancial
information
 The report must
o Be dated
o Be manuallysigned
o Indicate the cityand
state
o Identifythe financial
statementand
reportsthat theydid
cover
o Must followPCAOB
standards
Depositor
(originatoritself or
any financial
institution)
 A SPV acts as a depositor
and registrant.
 Conveys,assigns,receives,
purchasesandtransfersor
sellsthe pool of assets
(real,personal andmixed,
whereverlocatedand
howeveracquired) or
receivablestothe issuing
SPV
1106  If it is differentfromthe
sponsor,
o Provide its
ownership
structure
o Provide general
character of its
activities
o Discussits
continuingduties
 Purchase and
assumption agreement
 Purchase price
 Manner of conveyance
 Warranty provisions
 Recourse provisions
 Paymentdate
 Servicingprovisions
 Reversal clause
 Agreementwithrespectto
safe deposit
 Governinglaw
7 | Research conductedby Arthur Mboue
afterissuance  Successionprovision
Securitiesfinance
lawyers (lawfirms
specializedin
financial
transactionsand
securitieslaw)
 Ensure a legal efficacyof
the structure
 Advise onthe legal and
regulatoryaspectsof the
structure
 Advise onthe tax aspects
of the structure
 Draft and negotiate the
legal documents andcases
 Establishthe relevant
legal entities
 Reviewthe corporate
capacityand authority
(includingdelegationof
authority) of eachparty
prospectus  Provide name of the law
firmand itsexpertise and
experience relatedtothis
type of securitization
 Describe the formmaterial
contractual dutiesinthe
securitization
 Provide the nature,terms
and limitationsof its
contractual agreement
 Retentionagreement
 Legal opinion
 Comfortletters
 All contractual
agreements
 shouldinclude opinionson
o each party’scapacity
and authority
(includingdelegation
of authority) toenter
intoa transaction
o whetherthe
transaction
documentshave
beendutyexecuted
and representlegal
bindingand
enforceable
obligations
o whetherthe
requisite consents
and authoritieshave
beenobtainedand
registrationsmade
timely
o whetherall legal
formalitiesforthe
transferof
receivableshave
beencompliedwith
o whethersecurity
interestare effective
o whetherchoice of
lawand state of
organization
provisionare
effective
o tax treatmentfor
each jurisdiction
Issuer- Special
Purpose Vehicle
(establishedbythe
 Thisis a pre-existingor
newlycreatedSPE(mostly
a trust but alsoa LLC, LLP
1107, 10-K  Describe thisentityandits
formof organization
 Describe itspermissible
 almostall agreements Offeringcircular:
 termsand conditionsof the
securities
8 | Research conductedby Arthur Mboue
originatorandthe
structurer)
or corporation) forthe
purpose of the
securitization. Itisthe
nucleusof the
securitization. Itissues
securitiesinPPMor public
offeringmarket.
 It buysor receivesthemas
a loan
 In case of sale,the
originatorwill remove
themfromits legal control
and portfolio
 It alsoissuesdebt
securitiestothe investors
to fundthe acquisitionof
beneficial interestrights
activitiesanddiscretionary
activitieswithregardto
the administrationof the
assets
 Describe anyassetsowned
or to be ownedbythe
issuingentity
 Describe itsboardof
directorsor the like,if
applicable
 Describe the capitalization
of issuingentityandthe
amountof anyequity
contributingtothe entity
 Describe sale andtransfer
of the pool assetstothe
issuingentity
 Describe anyarrangement,
provisions,expensesand
bankruptcy provisions
 informationaboutSPV
 informationonthe
underlyingassetson which
the securitizationisbased
 mustcomplywithlegal
requirementsapplicableto
securitiesofferingsineach
jurisdictionwhere securities
are listedandthe jurisdiction
where the SPV is
incorporatedororganized
Chosenby the SPVleadership
Security Trustee
(professional
corporate trustee)
 He isthe guardianof the
trust certificatesissuedto
newownersof securities
 Holdscertificatesaccounts
before distributiondate
 Makes paymentto
investors
 Holdsnote and securities
documents
 Holdsand drawson
reserve fund
 Advancesonbehalf of
Master servicer,if
necessary
 Maintainscertificate
register
1109  Some disclosure relatedto
Trustee mayapplyto them
 trust deed Provisionsabout
 the securityinterestoverthe
assetsmakingupthe security
package
 Securitytrustees
enforcementpowersand
rightsto deal withthe assets
comprisingthe security
package
9 | Research conductedby Arthur Mboue
 OverseesMaster
servicer’sperformance
 Representsinterestof all
certificate holders
 Holdsand reinvests
reserve fundamounts,
payoutexcesstothe
originatororinvestors(it
dependsoncontractual
agreement)
 Calculatespaymentsof
certificate holders
Trustee (appointed
corporate trustee)
 isappointedtolookafter
the interestsof the
investors.
 can holdassetsgrantedto
investorsandbenefit
(includingbeneficial
interests) of covenantand
rightsinthe securitization
on behalf of the investors.
 has fiduciaryduty
obligationtowardthe
investorstosafeguardthe
assetspledgedas
collateral.Leadedbya
Master, trusteescan
conferreal and
discretionaryrightstothe
investorsbeneficiariesof
the trust.
1109  Disclose the trustee name,
itsduties,responsibilities
and itsformof
organization
 Describe the trustee prior
experience
 Disclose anyactionsthat
wouldbe requiredbythe
trustee uponan eventof
default,potential eventof
defaultaswell asrequired
percentage of a classor
classesof ABS thatis
neededtorequire the
trustee totake action
 Describe anylimitationson
the trustee’sliabilityunder
the transaction
agreementsregardingthe
ABS transaction
 Disclose anycontractual
provisionorunderstanding
regardingthe trustee’s
removal,replacementor
resignationaswell ashow
the expensesassociated
 securitytrustdeed
 Trust Certificate
 SPV’scovenantstopaywhich
runs parallel withthe SPV’s
promise topay inthe
certificatesrepresentingthe
securities
 SPV’sfurthercovenants,
representations and
warrantiesforthe benefitsof
the investors
 Schedule of termsand
conditionssetout inthe
offeringcircularandthe form
of certificatesrepresenting
the securities
10 | Research conducted by Arthur Mboue
withchangingfromone
trustee toanothertrustee
will be paid
Chosenby the structurer/arranger or trustee ofthe SPVon behalfofthe SPV
Paying agent (major
bank)
 Setout agentpowers,
duties
 Setout documents
policies concerning
paymentstoinvestors
prospectus  Provide the name of the
payingagentand itsform
of organization
 Describe the payingagent
material rolesand
responsibilities inthe
securitization
 Provide the general
character of its contractual
agreement
 Provide itsexperience in
the securitizationand
indicate astatementor
reportincludedattributed
to such experience
includingprioractions
 Provide feesandexpenses
tablesindicate toeach
itemandits purpose
 Payingagency
agreement
 Setsout techniquesfor
paymentstoinvestorsof
principal andinterests
 Mechanismto exchange or
replace damagedorlost
certificates
Servicer(alsoacts
somethingas
receivingandpaying
agent,originator
itself or)
 Collectingprincipal,
interestandescrowfrom
the borrowers
o Late paymentfees
o Legal document
prepaidfee
o Float
o Otherdue to the
issuer(servicer)
 Payingtaxesand
insurance fromescrowed
funds
 Monitoringdelinquencies
 Workouts/restructurings
 Executingforeclosures
1108  Provide servicing
experience of the company
o General
o Relating toassets
of the type being
securitized
 Discussmaterial changes in
servicingpoliciesduring
past 3 years
 Discussinformationabout
financial condition,if
material
 Provide material termsof
servicingagreement
o Advancing
 Servicingagreement
 Cleanupagreement(if it
alsoplaysan originator
duties)
 Main dutyto collectamounts
due underthe receivables
contracts
 Procedures andactionsto be
takenagainsttroubled
debtors
 Provisionsabouttroubled
debtormanagement
(includingdefaultnotice,
collectiontimeline and
notices,repossessionand
liquidation)
11 | Research conducted by Arthur Mboue
 Remittingfeesto
guarantors,trusteesand
othersprovidingservices
 In some case including
revolvingstrategy,
investingfunds
temporarilypriortotheir
distribution
 Accountingforand
remittingprincipal and
interestpaymentstothe
holdersof beneficial
interestsinthe financial
assets
o Proceduresof
handling
delinquentand
defaultedassets
o Abilitytowaive or
modifyfees
o Abilityto
documentcustody
 Provide limitationson
servicer’sliability
 Discussback-upservicing
arrangements
Investment
manager (collateral
managerand 3rd
party investment
managementfirm)
 The portfolioof
receivablesunderlyingthe
securitizationrequires
active management
o Determine the
assetsmakingup
the portfolioboth
initiallyandonan
ongoingbasis
o Negotiate and
enteragreements
for the
acquisition,
managementand
sale of receivables
o Deal with
valuationsof the
portfoliorequired
by the SPV
o Complywith
reporting
requirements
relatingtothe
assetportfolio
Prospectus,
FWP
 Provide the name of the
investmentmanagerand
itsform of organization
 Describe the investment
managermaterial roles
and responsibilitiesinthe
securitization
 Disclose there any
restrictiononthe manager
duties
 Disclose general character
of itsbusinessactivities
 Provide the nature and
termsof itscontractual
agreement
 Provide total amounts
fees,directandindirectto
be paid
 Investmentmanagement
agreement
 Vendortradingpartner
agreement
 Strict eligibilityguidelinesin
respectof the assetsthat
may formpart of the
portfoliowhichthe
investmentmanagermust
complywith
 eventstriggeredthe
replacementof the manager
 compliance withstrict
investmentmanagement
reportingrules
12 | Research conducted by Arthur Mboue
 Paidon a percentage basis
plusotherdiscretional
incentive
 Can be requiredtoholda
juniortranche inorderto
share riskand raise
confidence andvalue of
the securitization
Collateral
administrator
(independent3rd
party,a bank)
 agenthiredto administer
the portfolio
 Maintainsa database
detailingthe contentof
the portfolioanduses to
o Run performance
tests
o Provide reportson
the underlying
assets
o Obtainvaluations
of the underlying
assets
o Calculate payment
and receipt
requirements
o Openand
administerbank
accounts
o Directpayments
to be made
accordingto the
transaction
documents
Prospectus,
Form S-3,
FWP
 Disclose the name of the
collateral administrator
and itsform
 Describe the collateral
administratormaterial
contractual agreement
 Disclose termsof any
administrationagreement
regardingissuingentity
 Provide itsexperience in
the securitization
 Collateral Administration
agreement
 Poweranddutiesof the
collateral administratorand
the collateral manager
provisions
 Theircompensationsclauses
 Termsof theirduties
provisions
 Termination,resignationand
appointmentof successor
provision
 Representation and
warrantiesprovision
 Governinglawclause (‘this
agreementshall be
constructedinaccordance
withand thisagreementand
any mattersarisingoutof or
relatinginanyway
whatsoevertothis
agreement,incontract,tort
or otherwise,shallbe
governedbythe lawsof the
State of…’)
 Bankruptcynonpetition,
limitedrecourse clause
 Assignmentof issuer’srights
provisions
 Jurisdictionclause
 signatures
13 | Research conducted by Arthur Mboue
Swap counterparty
(Wall Streetfirm
specializedin
derivatives)
 It can serve as eithera
brokeror a dealer
 As a broker,thisbank
matchescounterparties
but doesnotassume any
of the risksof the swap
transactions
 As a dealer,the swapbank
acceptseitherside of the
currencyand thenlater
reducestheirrisksor
matchesit with
counterparty
 It can line upbehindon
the sequential payment
schedulesagreementwith
the investors asa residual
classowner
 A swapis a derivative
whentwocounterparties
agree to a contractual
agreementtoexchange
cash flowsatperiodic
intervals
1115  Disclose the name of the of
the swap counterpartyor
calculationagent
 Disclose the name of the
derivative counterparty
 Disclose whetherthe
significance percentage is
lessthan10%, at least10%
but lessthan20% or 20%
or more
 Describe amaterial
provisionsregarding
substitutionof the
derivative counterparty
 Disclose itsdetermination
of anyAmountof
derivatives
 Disclose,insertandfile the
swapagreementasexhibit
 Disclose total fees,direct
or indirecttobe paid
 File the agreementrelating
to the derivative
instrumentasan exhibit
 Swapagreement
documents
o General
o Early
termination
o Taxation
o Rating
downgrade or
withdrawal
o Creditsupport
agreement
o Interestdeferral
o Transfers
 Provisionaboutdetailedrisks
and eventsleadingtoa swap
 Provisionaboutcredit
defaults,swaparrangement,
swapcounterpartyand
premiumpayment
 Provisionsaboutrisksharing
arrangementsinclude price
adjustmentclause,neutral
zone,outside neutral and
zerocost insurance clauses.
Monoline Insurer
(Monolineinsurance
company and large
insurance
specialized as
providerof financial
obligation,credit
enhancers)
 An insurance policywitha
monoline andirrevocable
agreementtopayinterest
and principal atthe
originallyagreedschedule
payments
 Monoline insurersaimto
minimize the riskby
o Acceptingonly
selected
investmentgrade
program
o Usinga deterring
toughanalysisand
1114  Disclose the name of such
enhancementproviderand
the nature of businessof
the monoline insurer
 Disclose anyactionsthat
wouldbe requiredbythe
monoline insureruponan
eventof defaultand
potential eventof default
 Disclose anylimitationof
thiscontractual agreement
 Disclose anycontractual
provisionorunderstanding
regardingitstermination,
 Insurance policy
agreement
Commonpolicydeclaration
 Policynumber,effective
date,expirationdate
 Name of the insurance
companyand broker
 Premiumforeachcoverage
Commonpolicycondition
 Cancellationterms
 Changes
 examinationof booksand
records
 inspectionsandsurvey
 transferrights
14 | Research conducted by Arthur Mboue
due diligence
process
o Maintaina
diversified
portfolio
 In evaluatingthe overall
creditworthinessof the
monoline,ananalysis
mustevaluate the adverse
change in cash flow
waterfall andthe
sufficiencyof the
monoline cashreserves
and capital,ratingactivity,
whetherthe monoline is
indefault,inthatred zone
or defaultappears
imminentandthe
potential forintervention
by an insurance orother
entities
resignationorreplacement
 Describe the methodused
for calculation,coveringa
least5 fiscal years
o Aggregate
principal amount
of all guarantee
o Reserve ratio
o Recoveryrate
o Loss rate
o Claimrate
coverage parts
Clearinghouses
(Depositary Trust&
clearing corporation
or Fedwire)
 Provide clearingand
settlementservicesforthe
securities
prospectus  Disclose the name andthe
nature of the businessof
the clearinghouse
 Identifyeachclearing
house usedandany
minimumamountthat
mustbe assignedasa
conditionof the
transaction
 Discussany arrangement
to keepthisamount
outstanding
 Disclose anyrightsrelated
to any excesscash
 Disclose anyrequirement
inthe transaction
agreementstomaintaina
 Insurance clearinghouse
service (ICS) agreement
 Vendortradingpartner
agreement
 Fedwire testinginstruction
o Institutionname
o ABA number
o Testcontact name
o Type of test
o Teststart date
 Fedwire FundandFedwire
securitiesservice form(3rd
party service arrangement,
operatingcircular)
15 | Research conducted by Arthur Mboue
minimumamountof
excesscashflowor spread
fromor retainedinterest
in,the transactionand any
actionsthat wouldbe
requiredorchangesto the
transactionstructure that
wouldoccur if such
requirementswere not
met
Rating agencies
(Standardand
Poors,Moody’s
investorservices,
Fitchratingsservice
or Duff&Phelps
CreditratingCo)
 Ratesthe securitiesto
opinion whetherthe SPV
has a strong or weak
capacityto pay interest
and principal whendue
 The rating isprovided
afterdetailedstatistical
analysisonthe probability
of defaultandthe effects
of suchdefaultonthe
abilityof the SPV to
complywithitspayment
obligationsinrespectof
the securities
1120  Disclose whetherthe
issuance orsale of any
classof offeredsecuritiesis
conditionedonthe
assignmentof acredit
ratingagencieswouldbe
useful informationto
investors
 Identifyeachratingagency
that isusedand the
minimumratingthatmust
be assignedasa condition
of the transaction
 Discussany arrangement
to have that rating
monitoredwhilethe ABS
are outstanding
 Include astatement
explainingthatthe ratingis
not a recommendationto
buy,sell orholdsecurities
 Disclose if the arrangerand
sponsorhas obtaineda
preliminaryratingtothat
classof ABS
 Partnershiportrust
Deedor certificate of
incorporation
 Copyof the Board
resolutionauthorizing
the rating
 Copyof the Bylaws
 Copyof the projectto be
rated
 Copyof all financial
statementsforthe last3
fiscal years
 Additional documents
underrequestfromthe
ratingfirm
 CIKnumber
 Usually,if the issuerdoesnot
requestthe rating,Moody
and S & P will simplydothe
ratingon the basisof the
publiclyavailable
informationanddiscloseitto
the public
 Fitchand Duff Phelpshave
onlydone solicitedratingof
any type of securities
 Fees
o Onetime fee to
requestrating
anytime
o S&P ($25,000 to
$125,000)
o Moody’s(~$
130,000)
Listing agent(law
formor company
specialized inlisting
 Researchandlistthe
companyor its shareson
the national securities
prospectus  Provide the name andthe
nature of the businessof
the listingagent
 Draft Form 8-A Listing
applicationfor
debenture
 In lieuof Form8-A,other
formscan be usedincluding
Form 10
16 | Research conducted by Arthur Mboue
inexchange) exchange
 Setout the detailsof the
listingstrategies
 Disclose towhatextent the
listingagentrelyonthe
company’saudited
financial reports
 Disclose if the listingagent
didrequestrelated
shareholdersdata
 Disclose of the listingagent
didfindthe securitizer’s
resourcessufficientto
meetitsobligations
 Disclose whetherthe
listingagentdidfindany
conflictof interestarising
fromthe securitizing
transactions
 Disclose whetherthe
listingagentdidverifyany
accuracy of the
transactions
 Disclose anylimitations
arisingfromthe listing
agent’scontractual duties
 Statementof
understanding
 Policiesandprocedures,
instruction
 Listingapplicationfor
AmericanDepositary
Receipt
 Rule 315 letter
o 8 copies,one is
manuallysigned
Stock exchange
(NYSE,NASDAQ,
JapanExchange
group,Euronext,
LondonStock
exchange group,
Hong Kongstock
Exchange,TMX
(Canada),Deutshe
Bourse)
 Servesasa global
platformtotrade
securities withelectronic,
anonymous andhybrid
trades
 Maintaina bodyof rules
to regulate itsmembers
prospectus  Provide the name andthe
nature of the national
securitiesexchange
 Disclose if youwill notlist
the securities
 Disclose where the trading
will be developed
 Copyof Charter
 Copyof By laws or
Partnership,operating
agreementorTrust deed
 Descriptionof
registrant’ssecuritiesto
be registered
 Certifiedcheckpayment
of the registrationfee
 Copiesof the latest
definitionof proxy,
annual reportto the
shareholders,annual
reportfiledtoSEC and
quarterreportsfiledto
 Afterthe program:the
companymustfile 2 copies
of final listingapplication
17 | Research conducted by Arthur Mboue
SEC
 Copyof Board resolution
authorizingthe
securitization
(certificate of secretary
as to adoptionof
resolutions)
 Copyof shareholders
resolutionauthorizing
the issuance of securities
for listing
 Copyof specimen
certificate (if needed)
 Copyof goodstanding
certificate from
jurisdictionof the entity
 Letterto NYSE fromthe
companyGeneral
counsel
 Copyof thisletterfor
filingstamp(along
addressedstamped
envelope)
Liquidityfacility
provider
 Setsout the detailsof the
liquiditysupportfacility
 Thisis a lenderunder
short termbasisin
relationtocertain
tranchesof the issued
securities
prospectus  Disclose the name of the
liquidityfacilityprovider,
itsbusiness andits
material rolesinthe
securitization
 Provide the nature and
termsof itscontractual
agreement
 Disclose anylimitationson
the liquidityfacility
providerunderthe
provideragreement
regardingthe ABS
transaction
 Provide asummary
 Liquidityagreement  Detailedof the standardloan
agreementtermsand
conditionsincludingthe
amountof the loanfacility
and the eventsleadingto
theiruses
 For tax reason,the
jurisdictiondoesmatter
18 | Research conducted by Arthur Mboue
financial informationof the
liquidityprovider
 Disclose if there isany
custodianintermediate
transferorandliquidity
providersinthe secondary
markets
 Disclose anymaterial
termsof anyagreement
withthat partyregarding
the ABS transaction
Credit
enhancement
provider
 Use as a financial
technique toimprove the
creditworthinessof the
issuedsecurities
 Guaranteespaymentof all
contractual cash flow
waterfall withinvestors
for interventionwhenthe
defaultappearsimminent
prospectus  Describe externaland
internal enhancement
 For external enhancement
providers
o Describe the
providerandits
business
o Summaryfinancial
informationfor
10% provider
o Auditedfinancial
statementfor20%
providers
 Creditenhancement
agreement
 Subordinationclause
 Reserve accountsclause
 Demandnotes clause
 Lettersof creditclause
 Suretybondclause
 Guaranteedinvestment
contract clause
 Swapsor otherinterestrate
protectionagreement
 Repurchase obligations

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Assessing ABS players table

  • 1. 1 | Research conductedby Arthur Mboue Players (type) Contractual duties Item number or form Basic disclosure Required documents Detailed Content Originator/sponsors (mostly large financial institutions, commercial enterprises, big real estatecompanies & mediumsized enterprises) Thisentity initiatesthe securitizationprogramfor lowercostsof borrowing, alternative source of borrowingandaccelerate cash receipts 1104, prospect us,form abs 15-G, prospect us Provide the following informationaboutthe sponsor  State the sponsor’sname and describe the sponsor’s formof organization  Describe the general character of the sponsor’s business  Securitizationprogram o General discussion regardingassetsof any type o Detaileddiscussion regardingassets of the type being securitized o Size,composition and growthof relevantasset portfolio o Otherinformation material toanalysis of the pool asset, such as prior securitization,early amortizationor defaults  Describe the sponsor’s material rolesand responsibilitiesinits securitizationprogram  If applicable,disclose pool assetsrepurchase activityfor all of the sponsor’s securitization  Agreementtotransfer the receivables  Assetpurchase & sale agreementorloan (consignment/pledge) agreement  Agreementstoprovide creditenhancementor liquiditysupport(if applicable)  Clean-upagreement  Servicingagreement(if it alsoacts as a servicer)  Must be clear  Containsrepresentations, warrantiesandany criteria the receivablesmustsatisfy  The SPV’srecourse andrights againstthe originatorfor breachof representation,, warrantyor contractual termsby the originator  Originator’sobligationto repurchase anyreceivable not eligible atthe representation  If the originatoralsoactsas a servicer,itwill be aprovision givingthe rightto the originatortopurchase all the remainingsecuritieswhenit reachesa certainlevel
  • 2. 2 | Research conductedby Arthur Mboue Debtor (anytype of customersof the originator-each personliable forthe full orpartial paymentor performance of any loanor debt whethersuch personisobligated directly, indirectly, primarily, secondarily,jointly or severally) Theyare the originator’s obligors. Theircreditscores and historicpayment experience are nucleustoa successof the full ABS program. Theydo notneedto be notifiedof,consenttothe transferof the receivables because theyare not participatingpartiesinthe securitizationprogram. Estimate of lossesor allowance forlossesrequires considerationof historical loss experience adjustedfor currentconditionand judgmentsaboutthe probable effectsof relevantobservable data includingpresent economicconditionssuchas delinquencyratesforhealthof specificcustomersandmarket sectors,collateral valuesand the presentandexpected future levelsof interestrates. The underlyingassumptions, estimatesandassessments usedto provide forlossesare updatedperiodicallytoreflect currentconditions. These assessmentsare subjectto regulatoryexaminations whichcan resultinchange to these assumptionsorworse. 1112, prospect us,FWP, 10-D, 10- K  Provide informationabout each significantobligorand the nature of the obligation  For obligorsthatare notABS issuers,provide information o Summaryfinancial informationfor10% obligors o Auditedfinancial statementfor20% obligors  If the obligorisAnissuing entityof ABS:the discussion requirementunderitems 1104, 1115, 1117, and 1119 of RegAB applied  Bill  Sale notice orsale agreement  Lease or rentcontracts  Itemnumber  Warranty duration of buyer  Price agreedon  AgreedInstallationpayments Investors(financial institutions, insurance companies,pension  Purchase the securities issuedbythe SPV  Receive interestand principal paymentsfrom Prospect us,1111  To enhance theirknowledge of the ABSbefore any investment,investorswould alsorelyon  Securitypurchase agreement  Securitytrustdeed (certificate)  Index of stockpurchase agreement o Definition o Sale and purchase of
  • 3. 3 | Research conductedby Arthur Mboue funds,hedgefund and wealthy individuals) the payingagentas scheduled o State of Pool assets o Tax matters o Legal proceedings Pool assets:  Describe the pool assetswith a tabular representationof average pool tosales, average balance,weighted average coupon,average age,remainingterm,average loanto value or simple ratio and weightedaverage standardizedcreditscore or otherapplicable measureof obligorcreditquality o Describe the typesof pool assetsto be securitized o Describe material termsof the pool assets o Describe solicitation, creditgranting o Provide the method and criteriabywhich the pool assetswere selectedforthe transactions o The cut-off rate or similardate for establishingthe compositionof the assetpool,if applicable o Identifybrieflylegal and regulatory provisions o Provide the nature  Stock certificates  Offeringmemorandum  Investorqualification questionnaire (forPPM)  Subscriptionagreement  Agreementtobecome a party to shareholders shares o Representationand warrantiesof seller o Representationand warrantyof buyer o Certaincovenants o Conditions precedent o Terminationpolicies o Indemnification
  • 4. 4 | Research conductedby Arthur Mboue of the reviewof the assetsperformedby an issueror sponsor o Disclose whichentity determinesthat those assetsshould be includedinthe pool despite o Provide atabular presentationof the pool asset characteristics Chosenby the sponsorofthe program Arranger/structurer (financial institution)  Designthe structure of the program  Designthe structure of the riskprofile of the receivablesinorderto create tranchesand their sequentialpayments schedules  Designa creditarbitrage strategy  Arrangescredit enhancement  Designa liquid strategy  Designa profitextraction method  List andmake arrangementof counterpartiestotake on risks  Ensuresthat the transactionproceeds througheach step is closed  Make agreementwithfirst buyersof the securities prospectus  Disclose the arrangername and itsformof organization  Describe the characterof the arranger business  Describe the arranger material rolesand responsibilitiesinits securitization  Disclose the arranger relevantfactsits participationinstructuring the transactions  Disclose the arrangerother informationincludingthe size,type andgrowth  Disclose the arranger’s experience andthe period of time thatthe arranger has beenengagedinthe securitization  Subscriptionagreement  Agreementbetweenthe corporationand investmentbankers  Agreementamong bankers  Agreementsbetween investmentbankersand underwriters,dealersor QIB  Offeringmemorandum, prospectus(offering circular)  Purchase agreement betweenthe company and the initial purchasers  Legal opinionsand  Comfortletters  Provisionsrelatedtothe initial purchase price forthe securitiesonthe issue date, subjecttoconditionsrelating to o The SPV’slegal status o Listingandrating of the securities  Provisionrequiringa cancellationof asale to investorsif amaterial adverse eventoccurs betweensigningthe subscriptionagreementand closingthe securitiesissue
  • 5. 5 | Research conductedby Arthur Mboue Underwriter Managers (financial institution)  Exercise agreementas firstbuyerof the securities  If it is a PPM, select qualifiedinvestors  Market the securitiesto the investors,brokersand qualifiedbuyers prospectus  Indicate the underwriter name and addressand telephonenumberof its registeredoffice  Describe the characterof itsbusiness  List all the typesof underwritersinvolvedin thissecuritizationandtheir duties  Describe the permissible activitiesandrestrictions on the activities  Disclose the total amount of feestobe paid  Provide informationabout originator’sunderwriting criteriaforthe assettypes  Disclose the anticipated schedule forthe offering and descriptionof market events  Describe the procedures by whichthe underwriter will conductthe offering and the proceduresfor transactionsinconnection withthe offeringwithan underwriterand participatingdealer  Agreementbetweenthe sponsorand underwriters  Agreementbetweenthe underwritersanddealers  Provide information aboutoriginator’s u8nderwritingcriteriafor the assettypes  Disclose the anticipated schedule forthe offering and descriptionof material events  Describe the procedures by whichthe underwritingwill conduct the offeringand the proceduresfor transactionin connectionwiththe offeringwithan underwritingor participatingdealers  Agreementamong underwriters(AAU)  Underwriters questionnaire and responses  Numberandtype of securitieseachmanagerhas agreedto buy  Paymentandallocationof the managers’commission  Delegatespowertothe arranger/leadmanagertoact on behalf of the syndicate Auditors (Accountingfirms, mostlybig4, kpmg, PWC, Ernst & Young and Deloitte)  Provide confirmationof financial informationin relationtothe SPV,and any guarantors,andthe receivablesthemselves  Involvedinthe latestaudit reportand financial statementsof the vehicle  Provide the name of the auditingfirm  Describe itsmaterial role and responsibilitiesinthe securitization  Provide the general character of its business and itsactions  Auditingagreement  Discussionwiththe independentauditor report  Reportfrom management  Comfortletters  Addressedtounderwriter managers o 1st at the time of signingof subscription agreement o 2nd justbefore completion
  • 6. 6 | Research conductedby Arthur Mboue  For newlyincorporated SPV, reporton itsposition immediatelyfollowingthe securitization  Provide the due diligence results(change ornot)  Carry-outthe financial modelingof the cashflows  Conductand disclose the resultsof financial analysis of the collateral  File the required reportto be includedinthe offering and disclosure documents  Disclose the auditorreport  Disclose if auditoropinion isunqualified,qualified, adverse ordisclaimer  Provide fees,directand indirectandall the engagementtobe paid (fee andexpensestable)  It mustbe dated,signed and state of certificationof the leadauditoror firm  SAS59 requiresauditorto evaluate goingconcernfora reasonable time with explanationparagraphif neededtoenhance managers’knowledge o Discussthe degree of independenceof the auditorand auditor’s consentduringthis assessment o State reasonsfor the offering o Confirmsthe reliabilityof the unauditedfinancial information  The report must o Be dated o Be manuallysigned o Indicate the cityand state o Identifythe financial statementand reportsthat theydid cover o Must followPCAOB standards Depositor (originatoritself or any financial institution)  A SPV acts as a depositor and registrant.  Conveys,assigns,receives, purchasesandtransfersor sellsthe pool of assets (real,personal andmixed, whereverlocatedand howeveracquired) or receivablestothe issuing SPV 1106  If it is differentfromthe sponsor, o Provide its ownership structure o Provide general character of its activities o Discussits continuingduties  Purchase and assumption agreement  Purchase price  Manner of conveyance  Warranty provisions  Recourse provisions  Paymentdate  Servicingprovisions  Reversal clause  Agreementwithrespectto safe deposit  Governinglaw
  • 7. 7 | Research conductedby Arthur Mboue afterissuance  Successionprovision Securitiesfinance lawyers (lawfirms specializedin financial transactionsand securitieslaw)  Ensure a legal efficacyof the structure  Advise onthe legal and regulatoryaspectsof the structure  Advise onthe tax aspects of the structure  Draft and negotiate the legal documents andcases  Establishthe relevant legal entities  Reviewthe corporate capacityand authority (includingdelegationof authority) of eachparty prospectus  Provide name of the law firmand itsexpertise and experience relatedtothis type of securitization  Describe the formmaterial contractual dutiesinthe securitization  Provide the nature,terms and limitationsof its contractual agreement  Retentionagreement  Legal opinion  Comfortletters  All contractual agreements  shouldinclude opinionson o each party’scapacity and authority (includingdelegation of authority) toenter intoa transaction o whetherthe transaction documentshave beendutyexecuted and representlegal bindingand enforceable obligations o whetherthe requisite consents and authoritieshave beenobtainedand registrationsmade timely o whetherall legal formalitiesforthe transferof receivableshave beencompliedwith o whethersecurity interestare effective o whetherchoice of lawand state of organization provisionare effective o tax treatmentfor each jurisdiction Issuer- Special Purpose Vehicle (establishedbythe  Thisis a pre-existingor newlycreatedSPE(mostly a trust but alsoa LLC, LLP 1107, 10-K  Describe thisentityandits formof organization  Describe itspermissible  almostall agreements Offeringcircular:  termsand conditionsof the securities
  • 8. 8 | Research conductedby Arthur Mboue originatorandthe structurer) or corporation) forthe purpose of the securitization. Itisthe nucleusof the securitization. Itissues securitiesinPPMor public offeringmarket.  It buysor receivesthemas a loan  In case of sale,the originatorwill remove themfromits legal control and portfolio  It alsoissuesdebt securitiestothe investors to fundthe acquisitionof beneficial interestrights activitiesanddiscretionary activitieswithregardto the administrationof the assets  Describe anyassetsowned or to be ownedbythe issuingentity  Describe itsboardof directorsor the like,if applicable  Describe the capitalization of issuingentityandthe amountof anyequity contributingtothe entity  Describe sale andtransfer of the pool assetstothe issuingentity  Describe anyarrangement, provisions,expensesand bankruptcy provisions  informationaboutSPV  informationonthe underlyingassetson which the securitizationisbased  mustcomplywithlegal requirementsapplicableto securitiesofferingsineach jurisdictionwhere securities are listedandthe jurisdiction where the SPV is incorporatedororganized Chosenby the SPVleadership Security Trustee (professional corporate trustee)  He isthe guardianof the trust certificatesissuedto newownersof securities  Holdscertificatesaccounts before distributiondate  Makes paymentto investors  Holdsnote and securities documents  Holdsand drawson reserve fund  Advancesonbehalf of Master servicer,if necessary  Maintainscertificate register 1109  Some disclosure relatedto Trustee mayapplyto them  trust deed Provisionsabout  the securityinterestoverthe assetsmakingupthe security package  Securitytrustees enforcementpowersand rightsto deal withthe assets comprisingthe security package
  • 9. 9 | Research conductedby Arthur Mboue  OverseesMaster servicer’sperformance  Representsinterestof all certificate holders  Holdsand reinvests reserve fundamounts, payoutexcesstothe originatororinvestors(it dependsoncontractual agreement)  Calculatespaymentsof certificate holders Trustee (appointed corporate trustee)  isappointedtolookafter the interestsof the investors.  can holdassetsgrantedto investorsandbenefit (includingbeneficial interests) of covenantand rightsinthe securitization on behalf of the investors.  has fiduciaryduty obligationtowardthe investorstosafeguardthe assetspledgedas collateral.Leadedbya Master, trusteescan conferreal and discretionaryrightstothe investorsbeneficiariesof the trust. 1109  Disclose the trustee name, itsduties,responsibilities and itsformof organization  Describe the trustee prior experience  Disclose anyactionsthat wouldbe requiredbythe trustee uponan eventof default,potential eventof defaultaswell asrequired percentage of a classor classesof ABS thatis neededtorequire the trustee totake action  Describe anylimitationson the trustee’sliabilityunder the transaction agreementsregardingthe ABS transaction  Disclose anycontractual provisionorunderstanding regardingthe trustee’s removal,replacementor resignationaswell ashow the expensesassociated  securitytrustdeed  Trust Certificate  SPV’scovenantstopaywhich runs parallel withthe SPV’s promise topay inthe certificatesrepresentingthe securities  SPV’sfurthercovenants, representations and warrantiesforthe benefitsof the investors  Schedule of termsand conditionssetout inthe offeringcircularandthe form of certificatesrepresenting the securities
  • 10. 10 | Research conducted by Arthur Mboue withchangingfromone trustee toanothertrustee will be paid Chosenby the structurer/arranger or trustee ofthe SPVon behalfofthe SPV Paying agent (major bank)  Setout agentpowers, duties  Setout documents policies concerning paymentstoinvestors prospectus  Provide the name of the payingagentand itsform of organization  Describe the payingagent material rolesand responsibilities inthe securitization  Provide the general character of its contractual agreement  Provide itsexperience in the securitizationand indicate astatementor reportincludedattributed to such experience includingprioractions  Provide feesandexpenses tablesindicate toeach itemandits purpose  Payingagency agreement  Setsout techniquesfor paymentstoinvestorsof principal andinterests  Mechanismto exchange or replace damagedorlost certificates Servicer(alsoacts somethingas receivingandpaying agent,originator itself or)  Collectingprincipal, interestandescrowfrom the borrowers o Late paymentfees o Legal document prepaidfee o Float o Otherdue to the issuer(servicer)  Payingtaxesand insurance fromescrowed funds  Monitoringdelinquencies  Workouts/restructurings  Executingforeclosures 1108  Provide servicing experience of the company o General o Relating toassets of the type being securitized  Discussmaterial changes in servicingpoliciesduring past 3 years  Discussinformationabout financial condition,if material  Provide material termsof servicingagreement o Advancing  Servicingagreement  Cleanupagreement(if it alsoplaysan originator duties)  Main dutyto collectamounts due underthe receivables contracts  Procedures andactionsto be takenagainsttroubled debtors  Provisionsabouttroubled debtormanagement (includingdefaultnotice, collectiontimeline and notices,repossessionand liquidation)
  • 11. 11 | Research conducted by Arthur Mboue  Remittingfeesto guarantors,trusteesand othersprovidingservices  In some case including revolvingstrategy, investingfunds temporarilypriortotheir distribution  Accountingforand remittingprincipal and interestpaymentstothe holdersof beneficial interestsinthe financial assets o Proceduresof handling delinquentand defaultedassets o Abilitytowaive or modifyfees o Abilityto documentcustody  Provide limitationson servicer’sliability  Discussback-upservicing arrangements Investment manager (collateral managerand 3rd party investment managementfirm)  The portfolioof receivablesunderlyingthe securitizationrequires active management o Determine the assetsmakingup the portfolioboth initiallyandonan ongoingbasis o Negotiate and enteragreements for the acquisition, managementand sale of receivables o Deal with valuationsof the portfoliorequired by the SPV o Complywith reporting requirements relatingtothe assetportfolio Prospectus, FWP  Provide the name of the investmentmanagerand itsform of organization  Describe the investment managermaterial roles and responsibilitiesinthe securitization  Disclose there any restrictiononthe manager duties  Disclose general character of itsbusinessactivities  Provide the nature and termsof itscontractual agreement  Provide total amounts fees,directandindirectto be paid  Investmentmanagement agreement  Vendortradingpartner agreement  Strict eligibilityguidelinesin respectof the assetsthat may formpart of the portfoliowhichthe investmentmanagermust complywith  eventstriggeredthe replacementof the manager  compliance withstrict investmentmanagement reportingrules
  • 12. 12 | Research conducted by Arthur Mboue  Paidon a percentage basis plusotherdiscretional incentive  Can be requiredtoholda juniortranche inorderto share riskand raise confidence andvalue of the securitization Collateral administrator (independent3rd party,a bank)  agenthiredto administer the portfolio  Maintainsa database detailingthe contentof the portfolioanduses to o Run performance tests o Provide reportson the underlying assets o Obtainvaluations of the underlying assets o Calculate payment and receipt requirements o Openand administerbank accounts o Directpayments to be made accordingto the transaction documents Prospectus, Form S-3, FWP  Disclose the name of the collateral administrator and itsform  Describe the collateral administratormaterial contractual agreement  Disclose termsof any administrationagreement regardingissuingentity  Provide itsexperience in the securitization  Collateral Administration agreement  Poweranddutiesof the collateral administratorand the collateral manager provisions  Theircompensationsclauses  Termsof theirduties provisions  Termination,resignationand appointmentof successor provision  Representation and warrantiesprovision  Governinglawclause (‘this agreementshall be constructedinaccordance withand thisagreementand any mattersarisingoutof or relatinginanyway whatsoevertothis agreement,incontract,tort or otherwise,shallbe governedbythe lawsof the State of…’)  Bankruptcynonpetition, limitedrecourse clause  Assignmentof issuer’srights provisions  Jurisdictionclause  signatures
  • 13. 13 | Research conducted by Arthur Mboue Swap counterparty (Wall Streetfirm specializedin derivatives)  It can serve as eithera brokeror a dealer  As a broker,thisbank matchescounterparties but doesnotassume any of the risksof the swap transactions  As a dealer,the swapbank acceptseitherside of the currencyand thenlater reducestheirrisksor matchesit with counterparty  It can line upbehindon the sequential payment schedulesagreementwith the investors asa residual classowner  A swapis a derivative whentwocounterparties agree to a contractual agreementtoexchange cash flowsatperiodic intervals 1115  Disclose the name of the of the swap counterpartyor calculationagent  Disclose the name of the derivative counterparty  Disclose whetherthe significance percentage is lessthan10%, at least10% but lessthan20% or 20% or more  Describe amaterial provisionsregarding substitutionof the derivative counterparty  Disclose itsdetermination of anyAmountof derivatives  Disclose,insertandfile the swapagreementasexhibit  Disclose total fees,direct or indirecttobe paid  File the agreementrelating to the derivative instrumentasan exhibit  Swapagreement documents o General o Early termination o Taxation o Rating downgrade or withdrawal o Creditsupport agreement o Interestdeferral o Transfers  Provisionaboutdetailedrisks and eventsleadingtoa swap  Provisionaboutcredit defaults,swaparrangement, swapcounterpartyand premiumpayment  Provisionsaboutrisksharing arrangementsinclude price adjustmentclause,neutral zone,outside neutral and zerocost insurance clauses. Monoline Insurer (Monolineinsurance company and large insurance specialized as providerof financial obligation,credit enhancers)  An insurance policywitha monoline andirrevocable agreementtopayinterest and principal atthe originallyagreedschedule payments  Monoline insurersaimto minimize the riskby o Acceptingonly selected investmentgrade program o Usinga deterring toughanalysisand 1114  Disclose the name of such enhancementproviderand the nature of businessof the monoline insurer  Disclose anyactionsthat wouldbe requiredbythe monoline insureruponan eventof defaultand potential eventof default  Disclose anylimitationof thiscontractual agreement  Disclose anycontractual provisionorunderstanding regardingitstermination,  Insurance policy agreement Commonpolicydeclaration  Policynumber,effective date,expirationdate  Name of the insurance companyand broker  Premiumforeachcoverage Commonpolicycondition  Cancellationterms  Changes  examinationof booksand records  inspectionsandsurvey  transferrights
  • 14. 14 | Research conducted by Arthur Mboue due diligence process o Maintaina diversified portfolio  In evaluatingthe overall creditworthinessof the monoline,ananalysis mustevaluate the adverse change in cash flow waterfall andthe sufficiencyof the monoline cashreserves and capital,ratingactivity, whetherthe monoline is indefault,inthatred zone or defaultappears imminentandthe potential forintervention by an insurance orother entities resignationorreplacement  Describe the methodused for calculation,coveringa least5 fiscal years o Aggregate principal amount of all guarantee o Reserve ratio o Recoveryrate o Loss rate o Claimrate coverage parts Clearinghouses (Depositary Trust& clearing corporation or Fedwire)  Provide clearingand settlementservicesforthe securities prospectus  Disclose the name andthe nature of the businessof the clearinghouse  Identifyeachclearing house usedandany minimumamountthat mustbe assignedasa conditionof the transaction  Discussany arrangement to keepthisamount outstanding  Disclose anyrightsrelated to any excesscash  Disclose anyrequirement inthe transaction agreementstomaintaina  Insurance clearinghouse service (ICS) agreement  Vendortradingpartner agreement  Fedwire testinginstruction o Institutionname o ABA number o Testcontact name o Type of test o Teststart date  Fedwire FundandFedwire securitiesservice form(3rd party service arrangement, operatingcircular)
  • 15. 15 | Research conducted by Arthur Mboue minimumamountof excesscashflowor spread fromor retainedinterest in,the transactionand any actionsthat wouldbe requiredorchangesto the transactionstructure that wouldoccur if such requirementswere not met Rating agencies (Standardand Poors,Moody’s investorservices, Fitchratingsservice or Duff&Phelps CreditratingCo)  Ratesthe securitiesto opinion whetherthe SPV has a strong or weak capacityto pay interest and principal whendue  The rating isprovided afterdetailedstatistical analysisonthe probability of defaultandthe effects of suchdefaultonthe abilityof the SPV to complywithitspayment obligationsinrespectof the securities 1120  Disclose whetherthe issuance orsale of any classof offeredsecuritiesis conditionedonthe assignmentof acredit ratingagencieswouldbe useful informationto investors  Identifyeachratingagency that isusedand the minimumratingthatmust be assignedasa condition of the transaction  Discussany arrangement to have that rating monitoredwhilethe ABS are outstanding  Include astatement explainingthatthe ratingis not a recommendationto buy,sell orholdsecurities  Disclose if the arrangerand sponsorhas obtaineda preliminaryratingtothat classof ABS  Partnershiportrust Deedor certificate of incorporation  Copyof the Board resolutionauthorizing the rating  Copyof the Bylaws  Copyof the projectto be rated  Copyof all financial statementsforthe last3 fiscal years  Additional documents underrequestfromthe ratingfirm  CIKnumber  Usually,if the issuerdoesnot requestthe rating,Moody and S & P will simplydothe ratingon the basisof the publiclyavailable informationanddiscloseitto the public  Fitchand Duff Phelpshave onlydone solicitedratingof any type of securities  Fees o Onetime fee to requestrating anytime o S&P ($25,000 to $125,000) o Moody’s(~$ 130,000) Listing agent(law formor company specialized inlisting  Researchandlistthe companyor its shareson the national securities prospectus  Provide the name andthe nature of the businessof the listingagent  Draft Form 8-A Listing applicationfor debenture  In lieuof Form8-A,other formscan be usedincluding Form 10
  • 16. 16 | Research conducted by Arthur Mboue inexchange) exchange  Setout the detailsof the listingstrategies  Disclose towhatextent the listingagentrelyonthe company’saudited financial reports  Disclose if the listingagent didrequestrelated shareholdersdata  Disclose of the listingagent didfindthe securitizer’s resourcessufficientto meetitsobligations  Disclose whetherthe listingagentdidfindany conflictof interestarising fromthe securitizing transactions  Disclose whetherthe listingagentdidverifyany accuracy of the transactions  Disclose anylimitations arisingfromthe listing agent’scontractual duties  Statementof understanding  Policiesandprocedures, instruction  Listingapplicationfor AmericanDepositary Receipt  Rule 315 letter o 8 copies,one is manuallysigned Stock exchange (NYSE,NASDAQ, JapanExchange group,Euronext, LondonStock exchange group, Hong Kongstock Exchange,TMX (Canada),Deutshe Bourse)  Servesasa global platformtotrade securities withelectronic, anonymous andhybrid trades  Maintaina bodyof rules to regulate itsmembers prospectus  Provide the name andthe nature of the national securitiesexchange  Disclose if youwill notlist the securities  Disclose where the trading will be developed  Copyof Charter  Copyof By laws or Partnership,operating agreementorTrust deed  Descriptionof registrant’ssecuritiesto be registered  Certifiedcheckpayment of the registrationfee  Copiesof the latest definitionof proxy, annual reportto the shareholders,annual reportfiledtoSEC and quarterreportsfiledto  Afterthe program:the companymustfile 2 copies of final listingapplication
  • 17. 17 | Research conducted by Arthur Mboue SEC  Copyof Board resolution authorizingthe securitization (certificate of secretary as to adoptionof resolutions)  Copyof shareholders resolutionauthorizing the issuance of securities for listing  Copyof specimen certificate (if needed)  Copyof goodstanding certificate from jurisdictionof the entity  Letterto NYSE fromthe companyGeneral counsel  Copyof thisletterfor filingstamp(along addressedstamped envelope) Liquidityfacility provider  Setsout the detailsof the liquiditysupportfacility  Thisis a lenderunder short termbasisin relationtocertain tranchesof the issued securities prospectus  Disclose the name of the liquidityfacilityprovider, itsbusiness andits material rolesinthe securitization  Provide the nature and termsof itscontractual agreement  Disclose anylimitationson the liquidityfacility providerunderthe provideragreement regardingthe ABS transaction  Provide asummary  Liquidityagreement  Detailedof the standardloan agreementtermsand conditionsincludingthe amountof the loanfacility and the eventsleadingto theiruses  For tax reason,the jurisdictiondoesmatter
  • 18. 18 | Research conducted by Arthur Mboue financial informationof the liquidityprovider  Disclose if there isany custodianintermediate transferorandliquidity providersinthe secondary markets  Disclose anymaterial termsof anyagreement withthat partyregarding the ABS transaction Credit enhancement provider  Use as a financial technique toimprove the creditworthinessof the issuedsecurities  Guaranteespaymentof all contractual cash flow waterfall withinvestors for interventionwhenthe defaultappearsimminent prospectus  Describe externaland internal enhancement  For external enhancement providers o Describe the providerandits business o Summaryfinancial informationfor 10% provider o Auditedfinancial statementfor20% providers  Creditenhancement agreement  Subordinationclause  Reserve accountsclause  Demandnotes clause  Lettersof creditclause  Suretybondclause  Guaranteedinvestment contract clause  Swapsor otherinterestrate protectionagreement  Repurchase obligations