In securitisation, Actual/360 is a day-count convention that is used to calculate the
interest that is due on a loan or other financial asset. The Actual/360 day-count convention calculates the interest based on the actual number of days in the accrual period, but it uses a 360-day year.
The Actual/360 day-count convention is the most common day-count convention used in securitisations. It is a simple and straightforward convention that is easy to understand and calculate. The Actual/360 day-count convention also provides a consistent interest rate for all loans in the securitisation pool, which can make it easier to manage the securitisation.
However, the Actual/360 day-count convention can be less accurate than other day-count conventions, such as the Actual/365 day-count convention. This is because the Actual/360 day-count convention does not take into account the fact that some months have 31 days and some months have 30 days. As a result, the Actual/360 day-count convention may overstate or understate the amount of interest that is due on a loan.
Overall, the Actual/360 day-count convention is a simple and straightforward day-count convention that is commonly used in
securitisations. It is easy to understand and calculate, and it provides a consistent interest rate for all loans in the securitisation pool. However, the Actual/360 day-count convention can be less accurate than other day-count conventions, such as the Actual/365 day-count convention.