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Payments waterfall: Difference between revisions
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But it made rating agency analysts feel good, and like they were making a difference, so CDO structurers tended to roll their eyes, but ultimately roll with it. | But it made rating agency analysts feel good, and like they were making a difference, so CDO structurers tended to roll their eyes, but ultimately roll with it. | ||
===The Trustee Act and the Trustee’s primary responsibility. | ===The Trustee Act and the Trustee’s primary responsibility.=== | ||
You may see something like this — it is likely to be articulated more florally than this, but this is the essence: | You may see something like this — it is likely to be articulated more florally than this, but this is the essence: | ||
{{Quote| | {{Quote|“Trustee’s primary responsibility is to the Noteholders and has no responsibility to any other Secured Parties and need not act on their directions.”}} | ||
The Noteholders are the main debtors in the structure, of course, but they rank last in priority of payment. So, on first blush, you might ask, as the [[JC]] did, “why should the Trustee prioritise the interests of the security holders at the ''bottom'' of the waterfall?” Surely it should care more about the Swap Counterparty, and the parties further up? | The Noteholders are the main debtors in the structure, of course, but they rank last in priority of payment. So, on first blush, you might ask, as the [[JC]] did, “why should the Trustee prioritise the interests of the security holders at the ''bottom'' of the waterfall?” Surely it should care more about the Swap Counterparty, and the parties further up? | ||