ARC Ratings’ European Non-Performing Loans Securitisation Rating Methodology (the ‘Methodology’) applies to securitisations backed by pools of European non-performing receivables, usually loans (the transaction type, being designated as ‘NPL’). The Methodology specifically refers to securitisations of pools of defaulted receivables, where the determination of default has been made in accordance with the receivables’ terms, and/or the originator or servicer’s definition or practices, and/or according to widely accepted market standard default definitions. NPL transactions can be extremely diverse, containing defaulted debt, of various formats, not just loans, originated either to individuals or to corporates, and which may or may not be secured on an asset. The security assets themselves can vary, including property, vehicles, equipment, or less tangible assets such as a business or a third-party guarantee. As a result, the analysis of NPL transactions requires an in-depth analysis of both the receivables being securitised, and their underlying security (if any) as well as the servicer’s business plan.