Asset Backed Commercial Paper (‘ABCP’) is rated by analysing the conduit and transaction structure, capabilities of the sponsor and administrator as well as an analysis of the sponsor’s investment guidelines,  support mechanisms and an analysis of the underlying collateral. ABCP programmes are accorded a short-term rating.

ARC Ratings’ analysis addresses the main risks to ABCP investors (cash flow timing mismatches, the credit risk of the underlying collateral and seller or servicer risks) and the mitigation of these risks through credit enhancement, liquidity facilities, investment guidelines/portfolio management, issuance tests and triggers.