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As provided for in the ABS Guidelines, Originators may retain a first right of refusal option, which serves as a ?clean-up-option? of the remaining assets once the securitisation transaction becomes uneconomical to carry on upon maturity of the securitisation transaction.
In addition, the Originator may also be obligated to repurchase assets from the SPV if the Originator breaches any conditions, representations and warranties in respect of the securitisation transaction. Advisers to the transaction (particularly legal advisers) should ensure that the use of call options in a securitisation transaction would not negate the achievement of true sale as required under the ABS Guidelines. Remark: A Bond is a debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.
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