A top-up is a mechanism that allows the issuer to issue additional securities to investors. In Australian English, a top-up is sometimes referred to as a "re-issue" or a "tap issue".
A top-up can be used to:
- Increase the size of the securitisation: If the issuer needs to raise more money, they can issue a top-up to investors.
- Replenish the cash flows: If the underlying assets in the securitisation are not generating enough cash flows to meet the payments to investors, the issuer can issue a top-up to replenish the cash flows.
- Refinance the securitisation: If the interest rates have fallen, the issuer can issue a top-up to refinance the securitisation at a lower interest rate.
Top-ups are typically structured as a new issue of securities that are identical to the original securities. The new securities are typically sold at the same price as the original securities.
Top-ups can be a valuable tool for issuers of securitisations. They can be used to increase the size of the securitisation, replenish the cash flows, or refinance the securitisation.
Here are some additional information about top-ups:
- Top-ups are typically approved by the trustee of the securitisation.
- The terms of the top-up will be specified in the securitization documentation.
- The top-up will need to be registered with the relevant securities regulator.
A top-up is sometimes referred to as a "re-issue" or a "tap issue".