The originator agrees to repay the loan in fixed instalments of interest and principal - these instalments are in fact used by the SPV to pay off the bonds. The central legal document in the transaction is the loan agreement whereby the SPV gives a loan to the operator. Apart from creating a floating charge on all the assets of the operator, the loan agreement allows the SPV to appoint an administrator to run the business should the trigger events take place. The loan agreement also places several restrictions on the business, borrowing ability, disposal of assets, etc., by the originator. In addition, another central feature of whole business securitisations is the creation of an external liquidity facility to meet the bond repayments in the event of a delay in the takeover of business.
Rating agencies require several months' servicing to be pooled in the liquidity facility.
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