Over-Collateralisation (OC)

Glossary

Banking

Over-Collateralisation (OC)

To ensure an issuer of covered bonds or structured credit (such as securitisations and CLOs) are able to repay noteholders and bondholders on time in the event of insolvency, the underlying asset pool must meet minimum over-collateralisation levels (which vary by jurisdiction), in effect forcing issuers to hold assets in the asset pool in excess of the value of covered bonds or structured notes.

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