How will the process work if a new ABS issue closes on the same day as the TALF loan settlement date?
The borrower of a TALF loan must identify the counterparty expected to deliver the new issue ABS to be pledged as collateral at the time of the loan subscription. When the borrower’s primary dealer who submitted the loan request receives the confirmation of the loan and its details from the custodian two days prior to the loan settlement date, the primary dealer can extract the pertinent information to generate and forward a trade confirmation to the borrower’s delivering counterparty. The delivering counterparty can be the lead underwriter or co-manager of the new ABS security issue, other syndicate member, or the primary dealer agent of the borrower. The borrower must always remit the margin to their agent primary dealer who submitted the loan request. If the primary dealer is not the delivering counterparty, the primary dealer will forward the margin to New York Fed’s cash custody account at the custodian in order for the issuer to receive the full purchase price of the security iss
Related Questions
- If a TALF-financed ABS incurs a principal loss, would the loss be allocated between the borrower’s haircut and the TALF loan?
- How will the process work if a newly issued ABS closes on the same day as the TALF loan settlement date?
- How will the process work if a new ABS issue closes on the same day as the TALF loan settlement date?
