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an originator wishes to securitise 90 of a particular portfolio of its credit card r 599064

Securitisation with deferred consideration

An originator wishes to securitise 90% of a particular portfolio of its credit card receivables. Outside investors agree to pay for 85% of the receivables immediately (with no further recourse to the originator in the event that less than 85% recovery is achieved), with the further 5% to be paid to the extent that the receivables are recovered. Under such an arrangement, IAS 39 (IFRS 9) would regard 85% of the portfolio at most as having been transferred (subject to the other conditions in 3.5.1 above having been met). This is entirely appropriate, since the originator clearly remains exposed to all the risks associated with recoveries in the range 85%-90% of the portfolio.

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