00:01
Hello, to determine the rating on the bonds, we need to assess the credit support provided by the structure and consider the potential impact of adverse factors such as expected loss, elevated prepayments and uioli adjustment.
00:15
Let's go through the analysis step by step.
00:18
First, average life.
00:28
The weighted average life can be calculated by dividing the present value of the cash flows by the total outstanding principal balance.
01:24
However, since the information provided only mentions the weighted average coupon and the weighted average maturity, we don't have sufficient information to calculate the average life of the pool.
01:36
Second is credit enhancement reserve account.
01:57
The 2 % reserve account provides some credential enhancement by acting as a cushion against defaults.
02:04
So, it's 2%.
02:06
Subordination class b represents 10 % of the pool and provides support to class a.
02:49
Expected loss.
02:54
The expected loss of 5 % is an estimate of the potential credit losses in the pool.
03:10
Uioli adjustments of 3 .33 % represents an additional adjustment for potential losses...