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There are couple triggers in a structured finance deal . like when pool balance fall blow to a certian ration ( or bond balance fall below to a certain ratio agaist original issuance balance.

But what actually happen when a deal get called ?

Does the SPV use cash in account to buy the oustanding bond from investor ?

or SPV manager sell all the pool assets to someone(probabaly originator?) ,then using the proceeds to buy oustanding bonds from investor ?

what's the steps will be executed when a deal get called ?

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  • $\begingroup$ Loosely speaking it is similar to when a corporation "calls a bond". The investors have no choice but to surrender the bond and they receive a sum in cash as compensation based on agreed rules. $\endgroup$
    – nbbo2
    Jun 24, 2022 at 10:47

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Call means SPV manager can sell liquidate all the assets with a price agreed with 3rd party or originator. Then use the proceeds from the selling to redempt all the oustanding bonds and pay all the due fees.

If there is any residual remaining, then flow to the junior tranch holder

Then the deal/SPV is no longer existing.

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