Subordinated Class B PTC Pay-out

The Spy Trust is issuing two classes of PTCs as described previously. The predetermined hierarchy in the servicing of the two classes ensures that first losses are borne by the holders of the subordinated class, that is. the Class B PTCs. Subordination provides comfort to the Class A PTC-holders in two ways:

Firstly, residual cash flows that flow back each month to Class B PTC-holders are subordinated to the monthly principal and interest payments to Class A PTC-holders.

Secondly, principal redemption on.Class B PTC starts only after all the obligations to Class A PTC-holders are extinguished completely.

Based on the pool data obtained from the HDFC with regard to the scheduled amortisation of the pool, the subordination level stands at 32 per cent, that is 68 per cent of the pool principal would constitute the total principal pay-out to the Class A PTC-holders. The residual principal would be passed on to Class B PTC-holders only after the principal to Class A PTC-holders has been paid fully.

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