Issuance and cash flow
Money moves twice. It goes out once, at closing, to buy the receivables. Then it comes back, payment date after payment date, until the notes are repaid.
Out: subscription and closing
An investor subscribes during the subscription window. Their funds leave their account and are held in escrow by the issuer. They are not applied, and they are not the issuer's to apply. The subscriber can cancel and be refunded in full. This is the only reversible step in the life of the transaction.
When every class is fully subscribed, closing settles. One operation performs all of the following, or none of it:
- The proceeds leave escrow for the issuer.
- The notes are issued at par into each subscriber's wallet.
- The seller's subordinated loan funds the cash reserve.
This is delivery against payment: no party holds the other side's asset without having paid for it. The issuer applies the proceeds to the purchase price of the receivables and the seller assigns the portfolio. The issuer retains nothing, as a benchmark European prospectus words it: the estimated net amount of the proceeds is zero.
After closing the investor is no longer a subscriber. They hold a note, and it is repaid through the priority of payments.
Back: collections and the priority of payments
Each period the customers pay their instalments. The servicer reports the collections and the platform applies them.
The distributable amount is more than the collections. The entire cash reserve is released at the top and replenished at its own rank further down. Over a period this nets to zero, but in between the reserve stands ready to cover fees and senior interest if collections fall short.
The priority of payments settles each class its aggregate, coupon and principal together, to the paying agency, which pays each holder. Nothing is ever paid into the notes themselves: a note carries no balance and no value of its own. It is a claim, settled in cash.
A payment date in full
The most recent payment date on Series 1, to the cent:
| Line | Amount (EURC) |
|---|---|
| Collections | 9,900 |
| Reserve released into the pot | 5,000 |
| Carry from the previous period | 0.00018 |
| Available to distribute | 14,900.00018 |
| Fees | 50 |
| Interest Class A | 18.8126 |
| Interest Class B | 5.83331 |
| Interest Class C | 5.6250 |
| Reserve refunded | 5,000 |
| Principal Class A | 9,819.7291 |
| Carry forward | 0.00017 |
The paying agency received 9,850.00001 EURC and settled it to holders. The Class A note factor moved to 70.5477067%. Class B and C remain at 100%, because Class A amortizes first and is not yet repaid.
Who initiates what
The servicer initiates the payment date. That is the only privileged action, and it changes no number: the platform computes the entire cascade from the collections figure and the transaction's own state. Payment to holders can be initiated by any party, and amounts not yet delivered remain owed to the holder and collectable at any time.