Unconsolidated loan count (ULC) refers to the number of loans that are not consolidated on the balance sheet of the originator. In Australian English, unconsolidated loan count is sometimes referred to as "non-consolidated loan count" or "unconsolidated loan number".
ULC is important in securitisation because it is used to calculate the amount of credit enhancement that is required for the securitisation. The more loans that are unconsolidated, the more credit enhancement is required. This is because the originator is not exposed to the credit risk of the unconsolidated loans, so the investors need to be protected from losses if the loans default.
The ULC is typically specified in the securitization documentation.
Here are some of the applications of ULC in securitisation:
- To calculate the amount of credit enhancement: The ULC is used to calculate the amount of credit enhancement that is required for the securitisation.
- To assess the risk of the securitisation: The ULC can be used to assess the risk of the securitisation. A higher ULC indicates that the securitisation is more risky, as there are more loans that are not consolidated on the balance sheet of the originator.
- To manage the securitisation: The ULC can be used to manage the securitisation. For example, the originator may choose to sell loans to reduce the ULC if the securitisation is becoming too risky.
ULC is a valuable tool for securitisation. It can be used to calculate the amount of credit enhancement, assess the risk of the securitisation, and manage the securitisation.
Unconsolidated loan count is sometimes referred to as "non-consolidated loan count" or "unconsolidated loan number".