compression

English translation: reduction

11:12 May 31, 2018
English language (monolingual) [PRO]
Bus/Financial - Finance (general) / rating
English term or phrase: compression
Below is a brief description of the most common types of structures found in SF transactions. Cash flow modeling will reflect the specific structure of the transaction concerned in assessing the adequacy of credit enhancement at each rating level. Cash flow criteria may include a number of stress assumptions that are applied at different rating levels. Stresses may include, but are not limited to:
1. High and low prepayment stresses.
2. Asset coupon compression to stress revenue levels.

The text above is from Global Structured Finance Rating Criteria by Fitch, at https://fitchratings.co.jp/ja/images/RC_20100816_Global SF R...

What does "asset coupon compression to stress revenue levels" mean?
Karen Zeng
China
Local time: 19:48
Selected answer:reduction
Explanation:
The coupon is the interest:
"one of a number of small detachable certificates calling for periodic interest payments on a bearer bond"
http://www.dictionary.com/browse/coupon
They're carrying out a stress test, ie a simulation of adverse events. In this case, they're determining how much revenue they'd lose if interest rates were reduced.

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Note added at 2 hrs (2018-05-31 13:45:56 GMT)
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Yes, stress is a verb.
Selected response from:

philgoddard
United States
Grading comment
Thank you
3 KudoZ points were awarded for this answer



SUMMARY OF ALL EXPLANATIONS PROVIDED
4reduction
philgoddard
4reduction
Luis M. Sosa


Discussion entries: 1





  

Answers


1 hr   confidence: Answerer confidence 4/5Answerer confidence 4/5
reduction


Explanation:
The coupon is the interest:
"one of a number of small detachable certificates calling for periodic interest payments on a bearer bond"
http://www.dictionary.com/browse/coupon
They're carrying out a stress test, ie a simulation of adverse events. In this case, they're determining how much revenue they'd lose if interest rates were reduced.

--------------------------------------------------
Note added at 2 hrs (2018-05-31 13:45:56 GMT)
--------------------------------------------------

Yes, stress is a verb.

philgoddard
United States
Specializes in field
Native speaker of: English
PRO pts in category: 15
Grading comment
Thank you
Notes to answerer
Asker: Thank you. So, the "stress" in "stress revenue" is a verb, right? And I wonder, roughly speaking, how the mentioned level is calculated?

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10 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
reduction


Explanation:
Karen:
From the PDF Fitch document, asset coupon compression means a reduction in the dollar amount paid on the coupon date

Luis M. Sosa
Ecuador
Local time: 06:48
Specializes in field
Native speaker of: Native in SpanishSpanish
PRO pts in category: 1
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