While there has been much discussion on the background of the Astrea IV bond issuance and the Class A-1 bonds available for the retail public, less discussion is available on the structural safeguards built into the bond issuance in general.
Flipping through the Astrea IV prospectus, we note that there are five key structural safeguards:
- Reserves accounts;
- Sponsor sharing;
- Maximum loan-to-value ratio;
- Liquidity facility; and
- Capital call facility
In order to have a better understanding as to how these safeguards can secure investors’ interests, let us take a deeper look at each safeguard and what they mean.
1. Reserves accounts
The reserves accounts are specially earmarked accounts which are meant to accumulate cash specifically for the purposes of redeeming the Class A-1 and Class A-2 bonds on 14 June 2023.
Explanation: Think of the reserves account as a specially designated cash account that will accumulate cash from the proceeds …