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CA Final · Advanced Financial Management · Securitization

Himalaya Credit securitises a pool with principal outstanding of Rs 40 crore. The SPV issues PTCs for Rs 40 crore. In the month, the pool collects Rs 1.2 crore of principal repayments and Rs 0.3 crore as prepayments. Which PTC principal outstanding results after distribution of these collections to investors, assuming all principal collections are passed through?

PTC principal outstanding becomes Rs 38.5 crore. In a pass-through structure both scheduled repayments of Rs 1.2 crore and prepayments of Rs 0.3 crore go to investors, so Rs 1.5 crore reduces the original Rs 40 crore.

  1. ARs 38.5 croreCorrect
  2. BRs 38.8 crore
  3. CRs 39.7 crore
  4. DRs 40 crore

Explanation

Total principal collected = 1.2 + 0.3 = Rs 1.5 crore. Remaining = 40 - 1.5 = Rs 38.5 crore. Rs 38.8 crore leaves out prepayments; Rs 39.7 crore leaves out scheduled repayments.

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