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Credit derivatives terminology
By
Vinod Kothari
Collateral security In case of issue of credit linked notes, the SPV may invest the proceeds of issue of the notes, usually in a AAA-rated portfolio of securities, to ensure that the repayment of principal to the investors is reasonably certain. The securities held by the SPV are offered as a collateral security to the investors. Normally, the security is pledged/charged in favour of a trustee.
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